Checklist: 4 financial steps to take prior to a divorce filing
You have reached the conclusion that your marriage is over and you are considering filing for divorce. You may want to act quickly, or, you may be lost and confused. This is a huge step in your life, and it’s going to impact you for years to come. That’s not something you want to rush through, risking mistakes. And, you also want to take certain steps to insure a positive result for your future after your divorce. Here are a few important tips in terms of financial steps to take to prepare for your divorce:
- Learn about your financial picture
Naturally, if your spouse handles most of the finances, this is especially important. You have to know what assets exist because you and your spouse are about to divide them. You may still trust your spouse to disclose everything, but there’s no telling how people will act during divorce. Leave nothing up to chance. Gather as many financial documents as you can to provide to your attorney. This will save you both time and money in your divorce and insure the best possible result for you.
- Remember both debt and income
Do not just look at your income — though it is wise to gather proof of this income, such as tax returns and payment documentation — but also at your debt. You and your spouse have to split up what you owe. You do not necessarily want to hold onto joint debts after the divorce. You should run a credit report for yourself as soon as possible – there are free credit reports available online. A full understanding of the financial situation helps you see where you’ll stand after divorce and what your goals will be in the division process.
- Create financial freedom
If you have joint accounts, you should ask your attorney if you are able to access or withdraw monies from those accounts. However, do not rely on joint accounts alone. Your spouse still has control over those, and you don’t know what’s going to happen when you break the news. You should discuss with your attorney whether you should immediately apply for your own credit cards or open your own accounts. It is important to make sure you will still have access to funds when you need them.
- Draft a budget
You must know where you want to go if you’re going to figure out how to get there. Creating a new budget allows you to see what you need on the other side of divorce. Life may be more expensive than you anticipate if you’re used to having two incomes and sharing costs. By creating a budget before you even need to use it, you can find out what type of financial outcome you want to work towards during the divorce. You may want to discuss with a financial advisor whether it makes sense for you to keep the marital home or whether you should look at alternative housing options. If your plan is to move out, discuss with your advisor or attorney whether it makes sense to do that prior to the finalization of your divorce action.
The financial side of a divorce can be complex, it can be confusing and it is definitely critical. It is important to have the assistance of an experienced divorce attorney to help you navigate through this process and those very important decisions you will have to make. Make sure you know exactly where you stand and what steps to take as you look to a bright future.