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By Shannon E. Cook
Divorce is a challenging life transition on many levels — emotionally, spiritually, and practically. Finances are often a big concern, particularly if there is a disparity in income levels between the two partners. The spouse making less money, or no money, in the case of the homemaker, often is at a disadvantage because they will not be walking away from the marriage with an assured current income. There are some strategies that will help position the more vulnerable spouse successfully. Here are 5 tips to prepare for divorce.
Hire a good attorney immediately. If there are property, significant assets, and/or custody issues to be managed, an attorney is vital to the process. Ask friends and family for referrals and speak to at least 3 before making your selection. Rapport is important, and you should feel comfortable that your attorney is out for your best interests.
Gather and make copies of all financial records. This includes tax returns, W-2’s, investment portfolio statements, bank statements, credit card statements, all loan documents, insurance policies, 401K statements, frequent flyer airmiles statements, and property appraisals. Your attorney will give you a complete list of what they need to begin to put together your financial picture, as well as what you can expect to leave the marriage with. Often, assets are divided 50/50, but this is not always the case.
Open a credit card in your name now, while you and your spouse’s credit is still combined. You will most likely have more access to money as a combined entity than alone, especially if you are not employed or less gainfully employed than your spouse. Don’t be discouraged if you receive a rejection from one company. Try again until you get your own card.
Open your own bank account (if you don’t already have an individual account) and make sure you have a stash of emergency funds in it. If you are concerned about your spouse’s reaction if you start moving money to a private account, try asking for cash back when you use your debit card at the store. Stash away this money in your account. Divorce proceedings can get nasty, and you should never count on your spouse’s good will to carry you through. While it is illegal in most places to prevent you from accessing marital assets for living expenses during a divorce process, in the event your spouse does attempt this, you will have your own money to use while your attorneys work it out before a judge. Just make sure you declare the money in this account when it comes time to disclose assets.
Make a realistic budget of what you (and your children) need to live on. Include rent or mortgage, insurance, food, gas, car maintenance, utilities, HOA dues, property tax, car payments, gym membership, and anything else that is a regular expense. Your lawyer will likely ask for this to help determine what to ask for in alimony and child support. It will be helpful for you as well to see what kind of income you will need in the future to maintain your lifestyle.