The following tips will help keep you on track and your divorce in order.
Tip #1 – Look at Your Current Financial Situation
Now that you’ve decided to divorce, it’s time to sort through your financials. But before you separate, pay for as many joint expenses using joint funds as you can. For example, pay for home repairs and new school clothes for the children using your joint account. After you split funds it becomes more complicated to track who pays for what expenses.
Next, complete a Credit Card Debt Worksheet. If you don’t have your own individual credit card account, consider opening one (or more) in your sole name (if you have the credit to do so). You should also cancel all joint accounts. While a judge may require the other party to make payments of a credit card, a credit card company can still come after you if your name is on the account creating the need to repair your credit in the future – this can be a real headache.
From the start, you should follow a routine that you want for the long term, since judges typically enforce the status quo. For example, stay in the home if that’s where you want to live. If you leave, it may become difficult for you to claim your personal items, residence of the home, and custody of the children.
If you do stay in the home, contact the utility company, phone company, cable company, etc., and put those accounts in your name. If you don’t, your spouse could call and cancel those accounts without you knowing.
Tip #2 – Start Saving
In addition to a credit card, you need an individual bank account in your sole name. While you will need to disclose the existence of this account during the divorce, the savings will ensure you have sufficient money to pay for expenses until the divorce is final. If you have liquid funds available, consider removing one-half of your liquid funds and depositing them into your separate account (you should consult with your attorney prior to doing this).
If you have trouble paying your bills, your new credit card will serve as an emergency source of funds. But remember the interest rates can make this an expensive choice. Borrow from someone you trust, a credit union, or your 401(k) instead of maxing out your credit cards.
Tip #3 – Create a Paper Trail
When going through a divorce, you will need to provide copies of all financial documents to the other side. These documents include tax returns, banking information, and insurance policies. It’s best to get these in order right away, so that documents don’t disappear and so that you enter into a divorce with all the information you need. You may find it helpful to print out our Divorce Document Checklist as a guide as to the documents you should start to collect.
Tip #4 – Schedule an Attorney Consultation as Soon as Possible
An attorney consultation is inexpensive and can help you decide on the best strategy for a divorce. Of course, you should also educate yourself by reading the California Divorce Guide and other books about divorce.
If you do work with an attorney, ask about mediation over litigation. Mediation is typically much less expensive and creates an opportunity for you and your spouse to work together instead of against each other.
Tip #5 – Understand Child Support and Spousal Support
Most states have mandatory child support guidelines that are enforced regardless of what one parent wants. These guidelines are based on income and on custody arrangements that you and the other parent decide on.
As for spousal support, if you decide to waive it the opportunity disappears forever. This means you should take spousal support into serious consideration before saying “no.”
Tip #6 – Divide all Marital Property Fairly
Dividing marital property creates contention in divorce. Do what you can to find common ground on both small and large issues.
You should also protect both your interests by documenting conversations. This makes it easier to keep track of your decisions.
The following items are often overlooked when dividing marital property. Before finalizing your divorce settlement, take these into consideration.
1. If you are undecided about keeping your house, think about the expenses that go along with it such as repairs, association fees, and upkeep. Is it even in your budget?
2. Retirement accounts are usually divided between the employee and non-employee spouses. To split the asset, you’ll need the help of a family law attorney or QDRO specialist (Qualified Domestic Relations Order, pronounced “quadro”).
3. Some states consider a professional license or degree marital property.
4. Take note of memberships, subscriptions, and frequent flyer miles. These are also marital property.
You may also want to hire a divorce accountant to make sure assets are assigned the correct value.
Have more questions about handling your finances during divorce? Check out the California Divorce Guide for a wealth of information.