Preparing Financially For Divorce
Divorce is emotionally devastating, and if you don’t prepare properly it could be financially devastating as well. If you are anticipating a divorce, it is time to figure out your finances. Here are the basic steps to preparing financially for divorce.
1) Gather as much documentation as you can.
The types of document to gather (originals or copies) include your most recent:
- Tax returns (last 3-5 years) & W2’s
- Bank statements
- Credit card statements
- Credit reports
- Investment account statements
- Retirement account statements
- Mortgage statements
- Property tax bills
- Loan papers
- Insurance records
2) Determine what you own.
Create an inventory of all your possessions, making notes about what belonged to each spouse before the marriage and what was purchased after. If you have receipts for any major purchases, make copies of those. Make a list of the possessions you want to retain.
3) Determine all sources of income.
This includes paychecks, business income, bonuses, cash “under the table”, stock options, what is being deferred into retirement accounts, etc. for both you and your spouse.
4) Determine what you owe.
Check your credit report for outstanding debts. Get statements showing the balance due on all those accounts. Obtain information about all loans.
5) Create a preliminary budget of what expenses you will incur during the divorce.
Obtaining the divorce –
- Filing fees
- Attorney fees (expensive!) or the much lower costs of a divorce support professional (like a Divorce With Dignity provider – findaprovider.dwdignity.com)
Getting the professional support you need –
- Children’s needs
Housing costs incurred for –
- Selling the home
- One or both spouses moving to a new place
- Setting up a new household
6) Create a preliminary budget for what you will need to live on after the divorce.
One of the biggest problems divorcing couples face is how to maintain the same standard of living after the divorce. Going from one budget to two budgets on the same income can be tricky. You may have to think of creative alternatives, such as home sharing, getting a better-paying job, selling some assets for temporary income as you train for a new career, or lowering your standard of living. Besides the costs of maintaining a household, you may also need to take into account the following -
- Children – school/tuition, extracurricular activities, childcare, health insurance premiums, health care costs not covered by insurance, child support expenses
- Spousal/Alimony support – will one party need financial help from the other? If so, how much and for how long?
Think about the most you want to have and your bottom line, because you’ll probably end up somewhere in the middle.
7) Accumulate some cash.
You will need money to live on, pay for the divorce, and perhaps hire legal, financial or mental health professionals to support you through the divorce. There may also be costs for moving and acquiring a new place to live. Start to save some cash each week.
8) Get professional financial support, if needed.
If you have a lot of assets, debt, or complex tax considerations, you will likely need help from a financial professional. Divorce With Dignity can provide referrals for the type of help you need, including Certified Public Accountants, Certified Divorce Financial Analysts, Credit Counselors, and Financial Coaches.
There are so many things to think about when preparing for a divorce. Finances are only one aspect, but it is a major one. Get a handle on this before doing anything else, and it will make things easier in the long run.
Getting a divorce doesn’t have to cost you a ton of money. Let us help you discover your options and get through your divorce – with dignity! Learn more at findaprovider.dwdignity.com.
The author of this blog is not an attorney and the information contained in these blogs should not be considered legal advice. The information provided here is based on the experience of the author and some of her clients whose actual names are not mentioned. Do not hesitate to seek the advice of an attorney if you have any legal questions