Although we do not always like to think about it, some marriages end in divorce for a variety of reasons. The financial implications of divorce can be significant, requiring careful consideration and planning to ensure a fair and equitable division of assets. There are many actions to consider when preparing for divorce, ranging from tracking all your expenses to working closely with a lawyer. As you prepare for divorce, keep the below financial considerations and planning in mind.
Track Your Expenses
As you prepare to split from your partner, ensure you understand your current financial situation. This includes being aware of all personal and shared expenses. Keep track of your spending habits, legal fees, and other costs associated with the divorce process. You can use traditional methods to keep track of your expenses, such as maintaining a physical ledger, or digital tools, such as Excel spreadsheets.
It is important to ensure that your expense sheet covers essential expenses, such as bills, groceries, and personal needs. Having a detailed record of all your finances helps you know how much money you spend and what you use it for. It also provides a comprehensive view of your financial health, which can be beneficial during divorce proceedings.
Budget for Your Future
Once you have a clear understanding of your current expenses, you should create a budget for your future. This budget should reflect your anticipated postdivorce changes, such as living on a single income and potentially paying or receiving alimony or child support. A prospective future budget could also be valuable in negotiating a fair settlement during the divorce process. If you need additional insight on finances, it is wise to consult a financial advisor for help creating a realistic budget as you plan for divorce.
Understand Alimony and Child Support
Both alimony and child support vary depending on the law and the specific circumstances of each divorcing family.
Alimony, or spousal support or maintenance, is a court-ordered financial payment from one spouse to another during or after a divorce. It’s intended to help the lower-earning spouse maintain their standard of living until they become financially independent.
Child support is a regular payment from one parent to the other for the financial support of their children. It covers expenses such as food, housing, and other basic needs of the couple’s child(ren). To evaluate how much support you could anticipate paying or receiving, it is recommended that you contact an experienced family law attorney who can advise you of your options.
Organize Important Documents
During a divorce, both parties are required to produce various financial documents. These could include a list of household expenses, as well as the following key documents:
- Bank statements
- Current pay stubs
- A list of all assets
- Tax returns
- Investment accounts
- 401(k) plan
Preserving and organizing these documents is essential in preparation for any potential divorce. This process also extends to documentation for shared accounts. If you and your spouse have a joint savings account, ensure you keep a record of it.
Consider having separate folders for each type of statement and categorizing them further into personal and shared assets, existing debts, and expenses. Once you work with an attorney, make copies of these documents to share with your legal advocate.
Keep Documents Somewhere Safe
In addition to keeping your financial records organized, storing them in a safe and secure location is essential. Consider using a locked file cabinet or investing in a safety deposit box at a bank. You can also save electronic copies of these documents on an external hard drive or cloud storage system.
Know Your Assets and Debts
When considering divorce, it is important to understand what assets and debts are in your marital estate. Examples of marital property often include a house, vehicle, or business; if you’re not sure whether something is marital property, confer with your attorney.
Additionally, courts will address shared debts, such as mortgages, credit card balances, and even student loans. You must clearly understand your assets and debts, as they can significantly impact the financial outcome of your divorce.
Avoid Altering Financial Documents
While it may seem appropriate to update your will or change account beneficiaries in anticipation of divorce, wait until the divorce proceedings have concluded.
Making changes beforehand can cause complications and delays, potentially leading to misunderstandings or disputes. Follow the appropriate legal procedures and seek a qualified professional’s guidance to navigate this complex and sensitive situation. Doing so can safeguard your interests and ensure a smoother transition during the divorce.
While you shouldn’t alter major documents, you may change the passwords or PINs on your personal accounts. For instance, if you have a personal debit card and account, you can change the PIN number to protect that money. Never change the passwords on shared accounts, as this can reflect negatively on you in court.
Do Not Go on a Spending Spree
Neither you nor your soon-to-be ex should go on a spending spree, especially if the money comes from a shared account. Depleting the pool of shared finances may work against the spending party during court proceedings because it makes the spender appear irresponsible and vindictive.
Save Your Money
Another financial consideration to make while planning and preparing for divorce is how you save your money. Getting divorced can be expensive, and the process could be longer and more costly if the split isn’t amicable.
Moreover, after your divorce, you will need enough money in your savings account to support yourself. For example, you may need to cover moving expenses or legal fees. Saving money before and during the divorce proceedings can give you a financial cushion and make the transition smoother.
Engage a Qualified Legal Team
Hiring a highly competent and experienced legal team specialized in handling divorce cases is crucial. Their expertise and knowledge in this area will prove invaluable as they provide comprehensive advice and guidance tailored to your unique situation. With their assistance, you can rest assured that your interests are represented throughout the divorce process, ensuring a fair and favorable outcome.
Jones Law Firm, PC, Can Help
To the average person, divorce is undeniably complex and multifaceted. You may not understand all the legal and financial terms nor know what step comes next. Fortunately, family lawyers experienced with in-depth knowledge of our state’s divorce laws are ready to help you move forward.
If you’re looking for divorce lawyers in Colorado, Jones Law Firm, PC, can help you. Our attorneys understand and apply the laws surrounding divorce, including your right to alimony and child support, so that you can make the right decisions for your future. Our legal experts will work closely with you to help with the financial and legal documents you need for your case. When you hire one lawyer at Jones Law Firm, PC, you get our entire team on your case. Schedule your free consultation today.