Financial Transitions of Divorce
There are many transitions during a divorce from the emotional struggle to the changes in lifestyle. The financial transitions during divorce are very important because you want to protect yourself and ensure you will be secure in the future. Here are some important things to consider when handling the financial transitions of your divorce.
Know Your Partnership’s Value:
You need to have a clear understanding of your partnership’s total assets and debts. This means reviewing all relevant documents related to credit, getting property value assessed and understanding all soft assets like pension plans, stock options, insurance plans, etc. The more of this work you do before meeting with a lawyer, the more time and money you will save. Also, it is important that you make sure your name is listed on all household accounts and investments.
Until your partnership is legally dissolved, you and your partner share responsibility for your household’s debt. Immediately close any credit cards held in both your names. If you don’t have an individual checking account or credit cards in your name, start applying for them now to establish your own personal credit. You also want to put a “freeze” on any joint bank accounts if possible – this will ensure that both of you will have to provide signatures if money is to be withdrawn.
In addition to assessing your partnership’s value and freezing any joint credit or bank accounts, you also need to do an inventory of other legal and financial documents that involve your spouse. For example, check the beneficiaries on your life insurance or pension plan. You may want to make such beneficiaries a child or family member to ensure your assets will be dealt with properly. Also revisit your will or any other legal documents dealing with your estate. The more detailed you are during the divorce process, the more you are protected and the less you have to worry about after the divorce is finalized.
Know the Spectrum of Possibilities:
Most states use equitable distribution laws when dividing assets. This means that a judge decides what you will receive. This leaves a lot of room for interpretation and, if you and your partner don’t agree on a settlement, there is little way to predict what the outcome might be. However, talk to your lawyer about the range of possibilities. Look at your future should the worst case scenario happen and begin making lifestyle changes to prepare yourself for any situation. Evaluate your income sources and begin planning for ways to expand your personal revenue. Start budgeting and look for places you can cut on expenses until the divorce process is completed and you have more security.
Learn New Skills:
If you weren’t very involved with your partnership’s financial transactions, then it is important you learn how to perform these tasks now. From balancing the checkbook, to paying bills, to managing stock portfolios — these activities are now your individual responsibility and you need to do it well. There are many resources online to help smarten up your financial knowledge. One great resource is the “Money 101” course from Money Magazine at http://www.money.com/money/101.