Making the decision to divorce is a serious matter that comes with both emotional and financial consequences. Many of my clients over the years have simply overlooked the financial aspect of divorce due to the emotional pain that comes with their (or their spouses) decision to divorce. Here are a few things to consider BEFORE you file:
1. Know The Assets and Liabilities of Your Estate-Often, one spouse “controls” the finances of both parties and the other spouse has no clue what the financial state of the marriage is. Take the time to gain as much information as early as possible and make copies of all the statements you can find, including bank accounts, brokerage accounts, retirement, pension, even credit card accounts. Know how much you owed on your mortgage and vehicles. Also, make copies of your last three years of tax returns.
2. Create a Spreadsheet-Once you have gathered as much information as you can, create a spreadsheet listing all of your assets, liabilities, and income sources. Begin tracking your expenses. You should also list and take pictures of all of your valuable items such as jewelry, keepsakes, art, and collectibles as these items tend to “disappear” during a divorce.
3. Budget for the cost of your divorce. Many times the budget for the cost of your divorce is overlooked. Decide how much you are going to set aside to finance the expenses for your divorce and what accounts you are going to use to pay them. Also, start thinking about the life you want to lead post-divorce and determine how you will achieve that goal. If you don’t already have credit in your sole name, you may want to consider obtaining an individual credit card.
4. Consider Options to Litigation-Litigation is expensive. Consider other methods for resolving your divorce issues such as collaborative law or mediation. At least in those alternative dispute resolution methods, you have some control over the outcome of your case.
Taking the time to prepare for your divorce will greatly assist your attorney and hopefully, help you to plan financially for your “new life”.