Going through a divorce can be a financially strenuous process. Each spouse can pay $10,000 or more in court fees, mediation, attorneys, mortgage refinances and other expenses, explains FindLaw, an online, legal resource hub. Because divorce can be such an expensive process, it’s best to set yourself up for success.
Take these measures to financially protect yourself when going through a divorce:
Establish Legal Separation & File First
Establishing legal separation protects the money you make after that date. For instance, if you’re separated for eight months before divorce proceedings begin, the income you’ve accrued during that time will be awarded to only you. If your separation wasn’t established by court order, your ex may be entitled to half your earnings.
It’s also a good idea to file for divorce before your spouse. Doing so provides multiple financial benefits, including developing a robust and experienced divorce team, gathering important documents, securing access to funds and credit, and choosing where the divorce will be decided, explains HerMoney, a digital media company focused on women’s finances.
Identify Assets & Gather Documents
Identify how much money you have and where it is. Then, clarify the assets such as mortgages, bank accounts, or investments in your name and those in your spouse’s. Gather documentation to prove these items below to you, plus any other financial information. Ensure you make paper copies of bank account statements, tax returns, real estate records and credit card statements, so you don’t rely on electronic copies. An angry ex can change the passwords on your joint accounts, locking you out and preventing you from acquiring necessary documentation.
Move half of your jointly-held assets into a separate account so you have cash to pay bills and an attorney. This proactive step can help you avoid the possibility of your ex wiping out the account, and ensure you’ve secured critical cash flow. Also, don’t be the one to clear out the account; it won’t pay off in the long run. Once you’ve set up your own account, ensure your paychecks are being redirected there.
Cancel Joint Credit Cards
Prior to cancelling your credit cards, pay off any debt. Inform your spouse you’re going to cancel your joint credit cards, and then do so immediately. This safeguards your credit score from dropping if your ex were to rack up thousands of dollars in charges on the joint account. Then, open up your own credit card, separate from your spouse.
Know Your State’s Laws
State divorce laws can impact your finances, so it’s important you understand how they’ll affect your specific situation. Find out if your state recognizes no-fault or fault divorces. Typically, all states recognize no-fault divorces, but several have residency requirements you must meet before choosing this option. Determine if your state follows community or equitable distribution property laws. In community property states, all debts and assets are split 50/50, while in equitable distribution property states, multiple factors determine how the assets and debt are distributed.
Hire a Financial Expert
Enlist a certified divorce financial analyst to assess your financial situation and ensure a fair financial split. These specialists can help you attain your short- and long-term financial goals during and after your divorce. They can analyze tax implications, evaluate insurance needs, and determine whether you can keep your home or need to sell. For more information about this professional, read “What Is a Certified Divorce Financial Analyst & Why Should You Hire One?”
Secure Valuable Personal Property
Online resource nexus DivorceNet recommends you secure valuable property and information. Safeguard important documentation and store valuable items in a safe place. Ensure a vindictive ex doesn’t have access. In some cases, exes have damaged or stolen such property. Keep a close eye on the mail to ensure your ex isn’t hiding important pieces. If necessary, set up a private PO box. In addition to physical property, take steps to secure your digital property by changing your online passwords.
Reduce Unnecessary Expenses
Discuss canceling unnecessary costs, such as television subscriptions or additional telephone lines, with your spouse. You can both use this additional money toward your divorce team expenses and getting yourselves back on your feet afterward. It’s also a good idea to keep this mentality in mind after your divorce is finalized. You’ll be living solely on your income, so you may have to be frugal for a while.
Gregory C. Frank is the CEO and Founder of DivorceForce.