How to Prepare for Divorce Financially
As I always tell my clients, knowledge is power. Although getting a divorce can be devastating, frightening, and unsettling, there are ways you can take control to put yourself in a better position. Here are a few things you should keep in mind as you begin to plan for your divorce:
Know Your Assets
Many times couples divide their duties and responsibilities, and one party is left in charge of the finances, while the other doesn’t pay much attention to the status of the accounts. If you are anticipating a divorce, make copies of statements for all bank accounts, investment accounts, and retirement accounts. It doesn’t matter whether the accounts are in joint names or individual names. If they were accumulated during the marriage, they will be subject to equitable distribution, and it is important that you know where all assets are, as well as account numbers and balances.
Of less importance are deeds to real estate and car titles, although these documents will be necessary at some point. If you can’t obtain this information, your attorney will be able to obtain it through document requests or subpoenas once a Complaint for Divorce is filed.
Know Your Debts
In order to determine the equity you have in an asset such as a house, you will need to know the balance of the mortgage and home equity loan and/or lines of credit. In addition, obtain copies of credit card statements so you know current balances and account numbers, and whether those accounts are in joint names or individual names. If any credit card accounts are in joint names, but you don’t have the statements, you can easily get them online by signing up with the bank or institution and obtaining a pin number.
Know Your Incomes
A copy of the last three years of income tax returns is helpful to not only determine each party’s earned income, but the interest or dividends generated by assets as well.
Know Your Monthly Expenses.
If you are not the bill payer, take a look at the checkbook register and/or cancelled checks in addition to the credit card statements. Getting a handle on your monthly budget is not only eye-opening but important in terms of recognizing whether you over-spend and need to cut back, or if there is extra money each month that should be going into savings.
The above preparation will help you feel more in control of your finances and will give you the information you need in order to begin the divorce process.