Going through a divorce has the potential to wreak havoc on your finances if you aren’t careful. Even when you are careful, it could cause some serious problems for you. Below are a few of the most important things you will want to think about and remember when getting a divorce.
Know What’s Happening with Your Finances
First things first. You need to know the state of your finances. While this might seem simple enough, the fact of the matter is that in most households, only one of the spouses knows everything about the finances. Even though both might pay various bills and know what’s in the bank account, it’s generally just one person that knows about all of the investments, assets, taxes, etc.
Therefore, if you are the one who doesn’t know the in-depth nature of your marital finances, you need to learn. Find out as much as possible about your financial situation. Consider hiring a forensic accountant if you are worried that your spouse might be trying to hide something, or if you just need some help getting access to all of the information.
Cancel Joint Accounts
Chances are good that you have quite a few joint accounts with your spouse. You should shut all of those accounts down as soon as possible. Although you feel that you may be able to trust your spouse, you want to be on the safe side.
What happens if they suddenly run up the credit cards and max them out? In a community property state, you would be responsible for half of that debt. There are ways to prove that this type of debt accrual was not your fault and that you aren’t responsible, but this is not always guaranteed. The best thing to do is to cancel those joint accounts as soon as you can.
Mediation Can Make Asset Division Easier
Mediation is one of the best tools to use when going through a divorce. It can help you and your spouse to reach agreements on many—or even all—areas of your divorce. This includes dividing your assets and debts fairly between the two of you. If you can do this, it means you won’t have to rely on the judge to make those decisions, which may not work out in the best interests of either you or your spouse.
Keep in Mind Your Expenses and Cut Back
One of the biggest changes that a lot of people face when they are getting divorced is how it changes their expenses. When you are accustomed to having more income in the household, you get used to a certain way of life. However, when you have just one income after the divorce, things have to change. You may find that you are no longer able to go out for dinner as often, that you can’t take long vacations out of town, or that you need to downsize where you live.
As you are getting divorced, you have to look at your budget and make sure you are living within your means. This can be difficult for many people, but it’s necessary.
Consider Bankruptcy
If you are in a place where you and your husband or wife have a lot of debt between you, it may be a good idea to consider joint bankruptcy before you get divorced. This can help to lessen the amount of debt you owe, which will be easier on both of you after the divorce. If you don’t file for bankruptcy before the divorce, you can still file after on your own.
There are a lot of things you will have to consider when it comes to bankruptcy and divorce, including the timing of when you file. The best option is to talk with a specialist, such as a bankruptcy attorney, so they can help with the planning and guide you in the right direction.
Reconsider Taking the House
A lot of people decide that they want to keep the marital home. It could be that they want to keep the kids in the home they know and love. It might be because there are good memories in the house. Others feel that it would make good financial sense to keep the property.
However, they don’t always think about the full financial implications. You will now have to pay the mortgage, insurance, etc. on the home with just your income. This is not always easy to do if you don’t have the money for it. You will also need to refinance the home when you get divorced. It’s not always possible to qualify. Before you set your heart on keeping the house, make sure that you run through the finances with a specialist to ensure it’s a good idea for you.
Change Beneficiaries and Create a New Estate Plan
When you’re getting divorced, don’t neglect to change out your beneficiaries and update your estate plan. You likely don’t want your ex to get everything in your will, after all. You can instead make your children full beneficiaries, add siblings, parents, etc. Don’t forget to make these changes.
Work with Specialists and Seek Financial Advice
Divorce and finances are complex matters. Even though you may feel that you have a good grasp of what you need to do, it can become overwhelming. After all, you have a lot of other stress that is weighing you down. Most of the time, you will find that it becomes much easier to handle when others are helping. Work with a divorce attorney and consider talking to financial specialists to help with your finances during the divorce and going forward.
Getting a divorce has the potential to take a serious toll on your finances if you aren’t careful. Keep the above tips in mind, and it can be a bit easier for you to make it out of the divorce with your finances in better shape. A little precaution now will make your life easier going forward.
