Divorce isn’t cheap – you know that. But, just how expensive is it to say “I don’t?”
Here are some tips for dealing with the money side of divorce so you can both walk away financially fit.
Meet With An Attorney
The first thing you need to do is sort out the legal end of things. LawFirmOfAnnapolis.com is one resource that soon-to-be divorcees use. And, because divorce involves the splitting of communal assets, there’s a certain degree of finesse that needs to take place to make sure those marital assets become personal assets without a lot of added expenses or legal complications.
Plus, depending on where you live, there may be more than one type of divorce, including a limited divorce, absolute divorce, and military divorce. Each one differs in its approach and legal consequences. So, make sure your lawyer explains what the outcome of your divorce will be.
Some states allow for a Qualified Domestic Relations Order. Basically, this means that retirement funds are divided up between you and your spouse. A court issues the order, and it is executed once the divorce is finalized. This order can seriously impact your retirement savings, and your ability to retire comfortably.
Finally, if you have children, you have to sort out alimony or spousal support payments, child support, and custody of the kids.
Meet With A Financial Advisor
Meeting with a financial advisor is the second thing you should do. You will need to sort out your personal savings, separate mutual bank accounts, make sure you have your own personal budget, and set up your own retirement plan, if you don’t already have one.
Financial advisors can also help you change the beneficiary on insurance policies, retirement accounts, and other financial products with designated beneficiaries.
Your financial advisor can also help you take stock of your assets and liabilities. Create a net worth report so you know what your financial health is now, what it is likely to be after a divorce, and what you can do to move the needle in a positive direction.
You’ll also want to list all of your debts, or your share of the marital debts, because you’ll be responsible for paying these off once you’re divorced.
Freeze any home equity lines of credit so that your spouse isn’t tempted to take the money and leave you with a pile of debt.
When assessing your wealth, you should also look at anticipated income from any stocks you own, businesses, or income you get from rental property.
Protect Your Credit
Many people who go through a divorce end up with bruised credit. One of the first things you should do during the divorce process is separate your finances and close up any joint bank accounts. Open new accounts in your own name. This can help protect you if your spouse is struggling financially and looking for easy outs.
By closing accounts, and paying them off in full, you’re protecting your own credit from being ruined by the person you’re trying to get away from.
Make sure your spouse hasn’t missed any payments on a mutual or joint account by checking your credit report.
If possible, try to approach your spouse about making good on any debts, or his or her half of the debts.
Ms. Rodriguez-Nanney received her Juris Doctor degree from the University of Maryland School of Law in 1997. While in Law School, Ms. Rodriguez-Nanney was a member of the Maryland Journal of Contemporary Legal Issues, a member of the Latino Law Student’s Association and volunteered with the Public Justice Center, Inc. Ms. Rodriguez-Nanney is an experienced immigration attorney. She also handles domestic matters such as adoptions, custody disputes and divorce proceedings and understands the intricacies of domestic law.