How to Be Financially Prepared for a Divorce
A divorce can be a very emotionally draining process. Because of the emotions involved, few people consider that a divorce can also be taxing on one’s financial security. Financial mistakes that were made years ago, even prior to marriage, can come back and be a major factor in one’s divorce. Therefore, it is important to have a clear picture of one’s finances before, during, and after a divorce.
A recent article by the Huffington Post outlined some of the basic steps that can be taken, financially, before beginning the divorce process.
Have Your Documents Together. All documents regarding one’s personal assets and liabilities should be gathered early on in the divorce process or before the divorce begins. These documents include your tax returns, copies of your paystubs, year-end reports from your credit card companies, bank statements, stock or investment statement and anything that will accurately show what assets and liabilities you have. It is important to get these documents together early on. The last thing anyone wants during a divorce is to have to track down certain documents.
Know Your Credit Score. Knowing your credit score is important for a variety of reasons. You can’t buy a car, get an apartment or qualify for a mortgage unless you have good credit. During marriage, a couple may have joint credit cards. By having joint credit cards, the poor credit of a spouse may affect the credit of the other spouse, even though the other spouse is not at fault. Furthermore, it is important to have strong credit in order to move on after a divorce. Having joint accounts or credit cards during a marriage that led to bad credit can have negative implications when you are on your own once the divorce is over.
Have Your Own Accounts. As with the issue of joint credit cards affecting one’s credit score, it is important to have your own accounts, even prior to a divorce. Joint accounts can make the divorce process very complicated. This is because, with joint accounts, it is difficult to determine who contributed what to the account and, therefore, dividing the account appropriately is complicated. With separate accounts, it is evident which assets belong to which spouse, and diving the accounts is simplified because the accounts were never comingled.
Have a Financial Planner. Throughout the divorce process and at its conclusion, there are a variety of financial implications that can seem overwhelming. Financial planners can simplify some of the most complex issues for the divorcing couple at a time when simplicity is necessary.
The finances of every couple are different, and that is why every divorce is different. It is always advised that you consult with an experienced family law attorney to review your assets prior to and throughout the divorce process to ensure that the financial outcome of the divorce is equitable.