The financial implications of divorce can be difficult to understand and address. Couples getting divorced should know what steps to take to protect their financial futures but where should they start?
If you are getting divorced, there are many things you should consider during the divorce process. Negotiating the divorce settlement will include asset and property division, which can significantly change your expenses after the divorce has been finalized. This is why it is important to understand what assets and debts will be split and how other financial accounts may be affected.
One the best ways to prepare for the divorce negotiations is to have a list of your assets and liabilities. Understand which assets and debts are considered marital and which are considered individual. Marital assets and debts will be divided between the two spouses.
Assets include any mortgages, joint bank accounts and insurance policies. They also include any debt in your name like a joint credit card or loans taken out during the marriage.
Another step to take to prepare for negotiations is to review your credit report and score. You can do this by requesting your credit report, which you are able to request for free once per year. You should review your credit report to make sure you know what accounts are listed in your name and if they are considered marital or individual.
You should also create a budget by listing your income and expenses for each month. This will help you see how your income could be impacted after the divorce and how child support or spousal support could affect your finances.
Understanding the first steps to take before the divorce negotiation process can help you clearly see how asset and property division may affect your future financial goals. You should then be able to work with your attorney to discuss what options may be available to help protect your finances now and in the future.
Source: Wall St. Cheat Sheet, "7 Ways to Manage Your Finances Through a Divorce," Kirsten Klahn, June 8, 2014