Divorce Planning Checklist: 5 Financial Steps to Take Before Filing for Divorce
It’s no secret that divorce is almost never easy, with the huge emotional and financial tolls it takes on you, your children, other family members and even your business. Yet nearly half of all new marriages are now projected to end with a trip to a family law court. Despite the many difficulties and adjustments that need to be made, 50 percent of newlyweds will eventually choose to divorce.
As a family law attorney, I have some advice: Try to preserve the relationship.
That may sound odd coming from a divorce lawyer, but if there’s any way at all to reconcile, you should pursue that glimmer of hope. Undergo family counseling, give or accept apologies, make compromises whenever possible. Even if you decide later to divorce, if things are amicable, it will be less difficult emotionally and cost less money.
If none of that works, you may find some comfort in knowing you tried, and you’ll want to find all of the emotional validation you can get. Then start prepping for your financial future.
How to Prepare for Divorce – Five Financially Savvy Steps
Since divorce can be costly, I always recommend divorce mediation for couples who might be able to work out differences in a timely and reasonable manner. I NEVER recommend using an online divorce service though – initially a cheap way to get a divorce, that path can lead to much bigger financial problems in the future.
As for what you need to do before getting a divorce, start here:
- Save Money: Are you the spouse that’s moving out, or the one staying put? Either way, you’ll need cash to stock or maintain your household. Hopefully, you’ve been saving your own money in your own account since your very first job. If not, you should start socking funds away the moment the word “divorce” crosses your mind.
- Inventory Your Assets: List your business assets, real estate, vehicles, major appliances, furniture, jewelry, family heirlooms and anything else of value. Note the items that you think should be considered your sole property, i.e. something left to you from your family’s estate, etc. Take photos of the more valuable items, and copy insurance policies or certifications of these assets.
- Tally Your Debts: The expense of maintaining a second household will come as a shock for most families. Figure out what loans and expenses you have, if you’ll have any tax liabilities later in the year, what your kids spend on day-to-day lunches/snacks/entertainment, etc., and what expenses you can eliminate right now.Determine which credit cards and other debt obligations belong solely to you, to your spouse, or are co-owned. If you don’t have any credit cards of your own, you should consider getting one for emergencies.
- Become a Super Sleuth: Will your spouse tell you what he or she makes, or do you already know? Many people, especially if both parties are working professionals, do not know how much money their partner earns in salary, bonuses and benefits. Time to dig out those old tax returns and W2s. If your spouse owns a business, you may need a forensic accountant.
- Separate the Money: Time to maintain separate bank accounts. Working together, you should be able to divide savings accounts or checking accounts and expenses.If you suspect you’ll be financially “punished” the moment you ask for a divorce though, talk to your attorney about taking steps to secure some resources.
Whatever you do, realize that this is not the time to procrastinate. You and your partner should work out your problems if you can. If you can’t and/or you think your spouse is hiding assets, get a lawyer, save money, and gather as many financial facts as you can before filing for divorce.
Vanessa Soto Nellis is a Family Law Attorney who represents high profile clients in divorce, visitation or custody, spousal or child support, division of assets and divorce mediation proceedings. Contact her via firstname.lastname@example.org for more information.