Keeping an eye on your finances is always a good idea no matter what stage of life you are in. But when planning to divorce it is imperative to keep tabs on all of your financial details so that you don’t get short changed when the final divorce decree is handed down.
Getting It All TogethernnStart by gathering every possible financial document possible including (but not limited to):nn• Bank statements, n• Credit card statements,n• Auto and home loans,n• Investments statements,n• Retirement account statements, n• Real estate property records, n• Tax returns (both personal and corporate if that applies) n• Life, health and disability insurance policies, n• Any financial documents pertaining to businesses ownedn• Deeds and titles, andn• Wills and trustsnnMortgage applications can be especially helpful in finding hidden assets so don’t leave these out. This is where people usually put down every conceivable asset or income item in order to get approved for the mortgage and can sometimes provide a wealth of knowledge.
While this may be cumbersome, being organized will likely save you in the long run with reduced attorney and divorce financial planning fees and can help you to capture every dollar you deserve.
Figuring Out Where Things StandnnUnderstanding where you are financially can help ease the financial strain and pain of divorce. Once you have gone through the gathering process, make a list of every asset and debt item, sorting them into lists of “mine”, “yours” and “ours”.
This is crucial if you came into the marriage with assets of your own and have kept them titled solely in your name. Things like cash, investments, properties, vehicles, inheritance and gifts. Of course, whatever debt you brought into the marriage individually will be considered as well. If you shared those separate assets by depositing them into joint accounts, they are no longer separate assets and will be split among you both.
Generally, separate assets are considered apart from marital property (those things acquired while married); however, the value that those assets have grown during the marriage may be considered marital property and will be divided accordingly.
Make sure to copy everything and put the copies in a safe place. Records have a way of disappearing when divorce becomes imminent. Without them you have little ammunition to get what you may right fully be entitled to.
Defensive Financial Movesnn• Pull Your Credit Report – Find out now about any potential problems before the divorce is final. Make sure to get your reports from all three major credit reporting agencies – Experian, TransUnion and Equifax. Recent changes in the law allow individuals to have a free credit report from each agency once a year. Sometimes we see that your soon-to-be-ex has been spending on your joint accounts without your knowledge. This is a good time to review for inaccuracies as well. It is wise to pull your credit reports again 3 months after the divorce is final as well, to clean up any discrepancies and start your new financial future fresh.nn• Open Your Own Credit Accounts – It is important to establish credit in your own name if you don’t have any. For many women it is wiser and simpler to do while you are still married and can qualify, than to try and do it after the divorce is done. Getting approved for credit can be easier for an 18 year old in some cases, than for a 48 year old divorced woman.nn• Payoff and Close Joint Credit Accounts – This is crucial in the unhitching process. The more connected you remain financially to your ex-spouse; the more you put yourself at risk. Even if your divorce decree divvy’s up your debt, creditors are not a part of this agreement and will hold you liable for unpaid debts your spouse may have agreed to pay. Best bet – pay off everything if possible before the divorce is final.
Covering the basics in the beginning stages of your divorce can save you heartache, headaches and dollars as you move forward in the divorce process. Think of it like building a new foundation for your financial future.
Lisa C. Decker, CDFA™, is an expert in divorce financial matters. As a discreet problem-solver and trusted advisor she utilizes cutting edge tools and industry insight to guide her clients during one of life's most difficult challenges to “Divorce Your Spouse, Not Your Assets.” Visit Lisa at
www.DivorceFinancialInsight.com for details and her FREE audio series "5 Things You Must Know BEFORE You Sign on the Dotted Line.”n