Going through divorce can be a difficult and emotional process, yet partners must discuss many items before one can be finalized. For example, couples need to determine how they will split marital property, whether or not to keep the family home, as well as if any spousal support will be needed. Additionally, many individuals worry about the impact divorce might have on their finances and how they will provide for themselves in the future. Although some lifestyle changes are often necessary, in Preparing for Divorce, there are many steps a person can take to begin building his or her own credit, savings and financial identity.
How to Handle Finances When Preparing for Divorce
When preparing for divorce, start protecting your financial interests as soon as possible. For example, collecting your monthly bank statements and past tax returns will be beneficial at your initial consultation with a divorce attorney. In Massachusetts, there is a requirement that the parties exchange three years of financial documents, including investment, retirement and bank accounts. Also, be sure to avoid unnecessary major expenditures, check your credit report for any errors and begin to build savings for the post-divorce transition.
Once it is time to officially file for divorce, a person will discuss with his or her attorney a tentative budget that includes expected costs. Factors that are considered include a person's:
Income and earning potential
Child care needs
Necessary living expenses
Child or spousal support needs or obligations
Anticipated health or insurance costs
Life Insurance to ensure support can continue in the event of an untimely death of a party
Assets (owned either separately or jointly)
Outstanding liabilities
This analysis should provide a good idea of how financially prepared a person is to live a single life and whether any assistance will be needed from his or her spouse. However, preparing for divorce does not stop there. Most people have beneficiaries listed in their will and on life insurance policies. Do these need to be changed? Have all jointly owned bank accounts or safety deposit boxes been closed? Does your spouse have access to your credit card as an authorized user? It is often wise to close joint credit cards or at least terminating access to your spouse's use of a credit card that could adversely affect your credit rating. If you are unsure whether your spouse is a co-obligor or simply an authorized user, contact your credit card administrator to verify the status.
It is always best to avoid financial complications down the road and begin preparing for divorce today. Speak with an experienced divorce attorney to discuss your options and to begin protecting your financial future.
