Divorce doesn’t need to be a blow to your finances, especially if you keep these considerations in mind.
If you believe your marriage is heading for divorce, you will want to be financially prepared — for the divorce process and for what comes after. Consider these important actions if you are facing this situation.
Contact a divorce attorney. Divorce laws — and your rights and responsibilities in a divorce — vary state by state. An attorney will help you navigate the process and protect your rights and assets.
Identify your debts and assets. Make a list of all your debts and assets — and account for the cost basis of each respective asset. For example, $100,000 in stock shares does not hold the same value as $100,000 in liquid cash because of the tax implications.
Pull together three to five years of tax returns and recent financial statements. You need to be fully aware of all the income being generated by your household and where it’s coming from.
Request a credit report for both yourself and your spouse. This will help you see if there’s any outstanding debt that you’re not aware of. To see your spouse’s report, you may need to go through your attorneys.
Reevaluate your budget. Be sure you know how much it takes to run your household and calculate what it will cost to cover your needs and wants after the divorce. If you and your spouse have used the same financial advisor, you may want to have your own.
Understand the benefits offered by both of your employers. If there are benefits offered by your or your spouse’s employer that have not yet vested (such as company stock options, retirement plan contributions, or the like), you should include these in the divorce proceedings as assets. Also, make sure to consider how your health insurance coverage might change and what that will mean for your budget.
Make a list of items you’d like to keep. This could be anything from the marriage, from your primary home to furniture and inherited items to vehicles and second homes. You’ll want to know up front how much estimated replacements will cost, as well as maintenance costs for those things you may be awarded in the divorce decree.
Whether or not both partners are equal in terms of their financial contributions to the marriage, these are important steps to keep in mind as you financially prepare for a divorce.
