Divorce happens. Things change and sometimes no amount of counseling can salvage the situation. Perhaps the messiest piece of any divorce is trying to untangle years of joint financial activity. Getting financially ready for divorce may be one of the toughest things you’ll have to do.
If you see divorce on the horizon, there are some steps you can take to make things easier for yourself -- and your attorney -- on the financial side of things.
You need to begin to track all your expenses and any income received. This is important, not only to help you create a budget for your post-divorce life but also so that your attorney can see what your financial picture really looks like. Keep track of anything and everything you spend money on
It’s not just your current spending. You should also try and evaluate any future expenses that should be taken into account in court. Will you need to replace your car sometime in the next year or so? Include that in your future expenses. Do you have children who are about to start high school? You’ll need more money for extracurricular activities and possibly college tuition and/or car insurance.
You need to understand what money comes in and all the ways money goes out of your household. It may be painful, but you’ll be thankful when your attorney can effectively argue in court for what you need.
Yes, it’s a chore. Yes, it’s incredibly time-consuming. But, the most important thing you can do to prepare financially for a divorce is to start collecting all your financial records.
Start with your most recent pay stubs as well as any checking and savings account statements from the past year. Then, find retirement and investment account statements for the past year as well. Make sure to include any loan statements and credit card statements for the past year. It’s important to note not only financial assets but debits as well.
You will also need to find copies of your income tax returns from the last three years.
A handy guide to documentation comes from the Institute for Divorce Financial Analysts who have a checklist of items you need to gather.
Some people panic when they sense a divorce coming and start making huge changes, such as changing the beneficiaries on their life insurance or making distribution changes to their retirement account. The best advice is to stop, take a deep breath, and talk to your attorney.
Any changes you make could potentially benefit your spouse when you go to court. Even worse, once you file for divorce, any major changes to accounts could lead to criminal contempt charges.
Likewise, it’s not a good idea to empty bank accounts or make major changes without being transparent. Hiding financial actions from your spouse can backfire in court.
Divorce laws are complex and vary from state to state. Your friend in Michigan who has all kinds of advice may not have a clue how the state of Georgia runs. Your best source of advice when getting ready for a divorce is a competent, experienced attorney.
Whether you are thinking about moving money to a different account, emptying a fund, or just getting overwhelmed thinking about your budget post-divorce, an attorney can provide counsel as to what financial moves to make. They can also suggest financial advisors who specialize in divorce to help you better plan for the future.
Getting financially ready for divorce can take a lot out of anyone. However, being conservative with your money and following your attorney’s advice can make a huge difference in your stress levels and your court outcome
If you are thinking divorce is imminent, and you live in the Atlanta metro area, specifically Henry, Clayton, or Fayette counties, Family Matters Law Group is ready to hear your story and fight hard for your money and your assets. Our experienced team knows how stressful managing money during a divorce can be, and we can offer sound advice and counsel.
Setting up an initial consultation is as easy as calling or filling out our online contact form. We look forward to hearing from you.