How to Protect Yourself Financially After Filing for Divorce

Going through a divorce is undoubtedly a stressful and emotional undertaking. It’s a rollercoaster like no other, and in some cases, it may leave one financially and emotionally drained. Things are said that cut deep, and actions are taken that leave one wondering where to go from here.

Regardless of the nature of your divorce, safeguarding your finances should be a priority. When preparing for divorce negotiations, educate yourself on your financial options to make sure all bases are covered and get the best possible settlement.

1. Engage an Experienced Divorce Attorney

The ideal divorce attorney will emphasize collaborative divorce or mediation over courtroom battles. Both spouses can benefit from a structured process where they explore solutions to disputes, financial and non-financial, instead of letting a court decide.

2. Legally Establish the Divorce

As soon as the decision to file for divorce is made, the separation should be put in writing and motion. This not only signals the beginning of your new independent life, but it’s also a great tip for how to protect yourself financially. By having this noted on your financial records, any money you earn after that date is better protected. Therefore, if you’ve been separated for six months before the divorce proceedings, any money you make during that period is entirely yours. Failure to make the separation legally binding may result in your hard-earned cash being divided equally. The date you put the separation in writing also plays a key role in decisions regarding alimony and child support. A divorce attorney can help you navigate this process.

3. Put Together A List of Your Assets

Another great tip for how to protect yourself financially after filing for divorce is to put together a list of your assets. Some couples become extremely fussy about who’s owed what when dividing their assets. This especially happens in situations where the separation was triggered by a case of adultery or another serious breach of trust.

Men often assume they’ll receive all of the assets, while women worry they won’t receive anything. Try to put aside feelings of remorse or regret as much as you can. Doing this allows you to maintain your composure and use logic to speak up and protect what’s rightfully yours. To gain a better understanding of what you’re entitled to, you’ll need to go through all of your assets. Generally, assets are divided equally, but things such as premarital assets or inheritances are excluded.

4. Establish A Game Plan for Taxes

Establishing a game plan for taxes is an important step in how to protect yourself financially after filing for divorce. Regardless of your marital status, Uncle Sam still wants his invoice paid. However, most couples fail to think about the tax implications of a divorce. Before putting your signature on the dotted line, make sure you understand what you’re committing to; otherwise, the asset division may not be as equitable as it initially seems. For example, if one spouse takes the principal residence, and the other takes control of the retirement assets, each asset will attract a different tax regime. One spouse may end up losing much of the value of the asset they end up with to a tax burden in the future.

5. Undertake A Cash Flow Analysis

The day-to-day details of a divorce can be draining. However, while you’re negotiating who gets what, remember to plan in preparation for a single life. By performing a hands-on budget cash flow analysis, you’ll have a better understanding of your financial standing after the divorce. Add the revenue streams you expect to be left with after the divorce and deduct your expenses (divided into ‘essentials’ and ‘discretionary’). If you’re falling short, start cutting back on discretionary items. If there’s a surplus, consider yourself lucky.

Remember to factor in recurring expenses that you formerly split with your spouse. Such expenses may include your child’s regular trips to your family orthodontist, deck maintenance by your preferred composite metal decking service (if you’re left with the primary residence), or auto loan payments. You don’t want to encounter major financial surprises once you’re single again and living on your own. Review the last 12 months’ worth of bank and credit card statements. Pay close attention to large-ticket purchases such as auto leases, health insurance, and digital media subscriptions, among others. When you suddenly have to cover the entire bill, expenses can quickly add up.

6. Separate Debt

If you and your spouse have joint credit card accounts, you’re still liable for any debt they rack up on those cards. If you’re financially capable of paying off joint accounts, do so as soon as possible, then cancel the accounts. If you don’t have the funds, consider splitting up the debt and moving it to separately held credit cards. After paying off joint credit accounts, always close the accounts.

7. Keep An Eye On Your Credit

If you co-mingled financial accounts with your partner, note that their credit affects yours and vice versa. Even the most well-intended partner can unintentionally harm your credit by missing a payment to a trailer dealer or paying bills late. Your partner may also have access to sensitive financial information; so, keep an eye on your credit activity while they still do.

8. Maintain Control of Assets

If you and your partner can’t agree, a court will divide most of your assets evenly. However, exceptions apply for assets acquired before marriage and inheritance. Regardless of how you believe the court will divide your assets, don’t give your ex-partner complete control over your finances or other assets. Even if your ex-spouse was in charge of all financial matters throughout your marriage, protect yourself by staying informed. Your partner may decide to take advantage of the trust you once had in them and drain your finances.

9. Create Individual Accounts

One of the best tips for how to protect yourself financially after filing for divorce is to open a new bank account on your own. Divide the balance in your jointly owned accounts in half, then move the funds to your separate accounts. Make sure any direct deposits and withdrawals are transferred to your new account. Once your divorce is finalized, remember to change the beneficiary of your retirement accounts or life insurance. If you have children, consider designating a trust as the beneficiary of the funds until they’re old enough to legally receive them and responsible enough to manage finances.

10. Brace for Resistance

In peaceful divorces, information is exchanged freely. However, in an adversarial divorce, one spouse may decide to withhold papers unless they’re legally compelled to release them. This typically happens in cases where one spouse was in charge of managing the household finances. Even if things seem cordial, expect some rough patches during the process. By compiling all necessary documentation before filing, you’ll reduce the likelihood of conflicts arising. If your partner fights every move you make, talk to your divorce attorney regarding court-ordered options.

11. Sort Out Rent and Mortgage Payments

Landlords and mortgage companies still expect payments to be made while you’re going through the divorce process. You may wish to get your place even before the divorce is finalized, but that could hinder your claim to the house, and you’ll still be paying for at least half of the mortgage. While you and your partner may be objective enough to decide who keeps the home, it often makes more financial sense to sell it.

12. Invest In Professional Asset Valuation

It’s important to note that different assets attract different values. For example, a $50,000 bank account and a $50,000 401(k) account aren’t equal. Think about the tax implications before dividing the assets. Have a professional perform business and real estate valuations and let your attorney focus on the job they were hired for. What seems to be pricey upfront will be worthwhile in the long run.

13. Engage A Financial Advisor

While going through a divorce, you have to juggle between accounting for your assets and trying to keep your family together. Different assets are valued differently, so work with a financial advisor to get the best outcome from this difficult situation. When the lines get hazy, a financial advisor will keep your focus on your best interests at each stage of the process.

14. Review Account Ownership Policies

There are two main financial accounts, single and joint ownership. Each financial institution has its own policies regarding account ownership, which should be reviewed by couples. While some institutions permit the removal of one owner, others may demand the closure of joint accounts so new separate accounts can be opened. Changing beneficiaries is generally more straightforward, but each spouse must perform due diligence.

15. Try To Maintain Empathy

While an amicable divorce may seem far-fetched, especially if a breach of trust is the reason for the split, try to maintain empathy for your ex-partner as much as possible. An adversarial or vengeful divorce can run up legal fees far beyond a rational and calm divorce focusing on the division of assets.

Getting into a peaceful and empathetic mindset while experiencing feelings of sadness and rage will take a lot of your emotional strength, but you need to proceed amicably for the sake of your money and health. If your partner has a chronic illness such as abdominal cancer and needs the services of concierge pharmacists, keep that in mind as you negotiate the distribution of assets. They’ll need all the financial support they can get.

16. Understand the Cost of Going On the Defense

The cost of playing defense is an often-overlooked financial factor in divorce. Most couples prefer to go through an amicable divorce and avoid conflicts as much as possible. However, this isn’t always possible. For example, if you’re divorcing a narcissist, even attorneys may underestimate this personality trait. The sooner you take it seriously, the more money you’ll save. To prevent constant litigation, research to find the right divorce attorney.

17. Spend Conservatively

Separating joint funds can be tricky. The process largely depends on the laws of your state. Some states view all income, assets, and debt as belonging to a single pot. In the weeks and months leading up to your divorce, emptying that pot or just dipping into it more often than you usually do can be detrimental. This isn’t the time to buy that intrinsically safe iPhone you’ve been eyeing, or looking for nearby trailer dealers.

Whether it’s individual or joint accounts, stick to your normal spending habits. If you haven’t set aside funds to cover the cost of hiring a reputable divorce attorney and other related fees, try to agree with your partner about each spending a reasonable and similar amount. You can also talk about healthcare expenses, such as fitting adult braces or CPAP machine maintenance, among other medical emergencies. Ask your lawyer about a legal separation if you and your partner aren’t getting along since it would specify how to handle your finances until the divorce is finalized.

Gather Documentation

Your marriage’s financial health is evident from your financial records. Gathering all relevant financial documents early on is advised as the process can be laborious and time-consuming. If you and your spouse have joint accounts, you should be aware that your financial advisors or institutions are not obligated to keep your requests private. The documents you’ll need include:

• Income tax returns for the past three years.
• Statements of your checking and savings accounts in the past year.
• Statements of your investment account in the past year.
• Current statements of retirement accounts.
• Recent pay stubs.
• Ledgers for loans in the past year (mortgage, auto, and personal loans).
• Credit card statements in the past year.
• A list of debts and assets brought into the union and those accumulated since then.

Although divorce can be financially challenging, it doesn’t have to be a complete disaster. Hedge your bets by consulting an experienced divorce attorney who’ll safeguard your finances before and after divorce.

Going through a divorce is undoubtedly a stressful and emotional undertaking. It’s a rollercoaster like no other, and in some cases, it may leave one financially and emotionally drained. Things are said that cut deep, and actions are taken that leave one wondering where to go from here.

Regardless of the nature of your divorce, safeguarding your finances should be a priority. When preparing for divorce negotiations, educate yourself on your financial options to make sure all bases are covered and get the best possible settlement.

1. Engage an Experienced Divorce Attorney

The ideal divorce attorney will emphasize collaborative divorce or mediation over courtroom battles. Both spouses can benefit from a structured process where they explore solutions to disputes, financial and non-financial, instead of letting a court decide.

2. Legally Establish the Divorce

As soon as the decision to file for divorce is made, the separation should be put in writing and motion. This not only signals the beginning of your new independent life, but it’s also a great tip for how to protect yourself financially. By having this noted on your financial records, any money you earn after that date is better protected. Therefore, if you’ve been separated for six months before the divorce proceedings, any money you make during that period is entirely yours. Failure to make the separation legally binding may result in your hard-earned cash being divided equally. The date you put the separation in writing also plays a key role in decisions regarding alimony and child support. A divorce attorney can help you navigate this process.

3. Put Together A List of Your Assets

Another great tip for how to protect yourself financially after filing for divorce is to put together a list of your assets. Some couples become extremely fussy about who’s owed what when dividing their assets. This especially happens in situations where the separation was triggered by a case of adultery or another serious breach of trust.

Men often assume they’ll receive all of the assets, while women worry they won’t receive anything. Try to put aside feelings of remorse or regret as much as you can. Doing this allows you to maintain your composure and use logic to speak up and protect what’s rightfully yours. To gain a better understanding of what you’re entitled to, you’ll need to go through all of your assets. Generally, assets are divided equally, but things such as premarital assets or inheritances are excluded.

4. Establish A Game Plan for Taxes

Establishing a game plan for taxes is an important step in how to protect yourself financially after filing for divorce. Regardless of your marital status, Uncle Sam still wants his invoice paid. However, most couples fail to think about the tax implications of a divorce. Before putting your signature on the dotted line, make sure you understand what you’re committing to; otherwise, the asset division may not be as equitable as it initially seems. For example, if one spouse takes the principal residence, and the other takes control of the retirement assets, each asset will attract a different tax regime. One spouse may end up losing much of the value of the asset they end up with to a tax burden in the future.

5. Undertake A Cash Flow Analysis

The day-to-day details of a divorce can be draining. However, while you’re negotiating who gets what, remember to plan in preparation for a single life. By performing a hands-on budget cash flow analysis, you’ll have a better understanding of your financial standing after the divorce. Add the revenue streams you expect to be left with after the divorce and deduct your expenses (divided into ‘essentials’ and ‘discretionary’). If you’re falling short, start cutting back on discretionary items. If there’s a surplus, consider yourself lucky.

Remember to factor in recurring expenses that you formerly split with your spouse. Such expenses may include your child’s regular trips to your family orthodontist, deck maintenance by your preferred composite metal decking service (if you’re left with the primary residence), or auto loan payments. You don’t want to encounter major financial surprises once you’re single again and living on your own. Review the last 12 months’ worth of bank and credit card statements. Pay close attention to large-ticket purchases such as auto leases, health insurance, and digital media subscriptions, among others. When you suddenly have to cover the entire bill, expenses can quickly add up.

6. Separate Debt

If you and your spouse have joint credit card accounts, you’re still liable for any debt they rack up on those cards. If you’re financially capable of paying off joint accounts, do so as soon as possible, then cancel the accounts. If you don’t have the funds, consider splitting up the debt and moving it to separately held credit cards. After paying off joint credit accounts, always close the accounts.

7. Keep An Eye On Your Credit

If you co-mingled financial accounts with your partner, note that their credit affects yours and vice versa. Even the most well-intended partner can unintentionally harm your credit by missing a payment to a trailer dealer or paying bills late. Your partner may also have access to sensitive financial information; so, keep an eye on your credit activity while they still do.

8. Maintain Control of Assets

If you and your partner can’t agree, a court will divide most of your assets evenly. However, exceptions apply for assets acquired before marriage and inheritance. Regardless of how you believe the court will divide your assets, don’t give your ex-partner complete control over your finances or other assets. Even if your ex-spouse was in charge of all financial matters throughout your marriage, protect yourself by staying informed. Your partner may decide to take advantage of the trust you once had in them and drain your finances.

9. Create Individual Accounts

One of the best tips for how to protect yourself financially after filing for divorce is to open a new bank account on your own. Divide the balance in your jointly owned accounts in half, then move the funds to your separate accounts. Make sure any direct deposits and withdrawals are transferred to your new account. Once your divorce is finalized, remember to change the beneficiary of your retirement accounts or life insurance. If you have children, consider designating a trust as the beneficiary of the funds until they’re old enough to legally receive them and responsible enough to manage finances.

10. Brace for Resistance

In peaceful divorces, information is exchanged freely. However, in an adversarial divorce, one spouse may decide to withhold papers unless they’re legally compelled to release them. This typically happens in cases where one spouse was in charge of managing the household finances. Even if things seem cordial, expect some rough patches during the process. By compiling all necessary documentation before filing, you’ll reduce the likelihood of conflicts arising. If your partner fights every move you make, talk to your divorce attorney regarding court-ordered options.

11. Sort Out Rent and Mortgage Payments

Landlords and mortgage companies still expect payments to be made while you’re going through the divorce process. You may wish to get your place even before the divorce is finalized, but that could hinder your claim to the house, and you’ll still be paying for at least half of the mortgage. While you and your partner may be objective enough to decide who keeps the home, it often makes more financial sense to sell it.

12. Invest In Professional Asset Valuation

It’s important to note that different assets attract different values. For example, a $50,000 bank account and a $50,000 401(k) account aren’t equal. Think about the tax implications before dividing the assets. Have a professional perform business and real estate valuations and let your attorney focus on the job they were hired for. What seems to be pricey upfront will be worthwhile in the long run.

13. Engage A Financial Advisor

While going through a divorce, you have to juggle between accounting for your assets and trying to keep your family together. Different assets are valued differently, so work with a financial advisor to get the best outcome from this difficult situation. When the lines get hazy, a financial advisor will keep your focus on your best interests at each stage of the process.

14. Review Account Ownership Policies

There are two main financial accounts, single and joint ownership. Each financial institution has its own policies regarding account ownership, which should be reviewed by couples. While some institutions permit the removal of one owner, others may demand the closure of joint accounts so new separate accounts can be opened. Changing beneficiaries is generally more straightforward, but each spouse must perform due diligence.

15. Try To Maintain Empathy

While an amicable divorce may seem far-fetched, especially if a breach of trust is the reason for the split, try to maintain empathy for your ex-partner as much as possible. An adversarial or vengeful divorce can run up legal fees far beyond a rational and calm divorce focusing on the division of assets.

Getting into a peaceful and empathetic mindset while experiencing feelings of sadness and rage will take a lot of your emotional strength, but you need to proceed amicably for the sake of your money and health. If your partner has a chronic illness such as abdominal cancer and needs the services of concierge pharmacists, keep that in mind as you negotiate the distribution of assets. They’ll need all the financial support they can get.

16. Understand the Cost of Going On the Defense

The cost of playing defense is an often-overlooked financial factor in divorce. Most couples prefer to go through an amicable divorce and avoid conflicts as much as possible. However, this isn’t always possible. For example, if you’re divorcing a narcissist, even attorneys may underestimate this personality trait. The sooner you take it seriously, the more money you’ll save. To prevent constant litigation, research to find the right divorce attorney.

17. Spend Conservatively

Separating joint funds can be tricky. The process largely depends on the laws of your state. Some states view all income, assets, and debt as belonging to a single pot. In the weeks and months leading up to your divorce, emptying that pot or just dipping into it more often than you usually do can be detrimental. This isn’t the time to buy that intrinsically safe iPhone you’ve been eyeing, or looking for nearby trailer dealers.

Whether it’s individual or joint accounts, stick to your normal spending habits. If you haven’t set aside funds to cover the cost of hiring a reputable divorce attorney and other related fees, try to agree with your partner about each spending a reasonable and similar amount. You can also talk about healthcare expenses, such as fitting adult braces or CPAP machine maintenance, among other medical emergencies. Ask your lawyer about a legal separation if you and your partner aren’t getting along since it would specify how to handle your finances until the divorce is finalized.

Gather Documentation

Your marriage’s financial health is evident from your financial records. Gathering all relevant financial documents early on is advised as the process can be laborious and time-consuming. If you and your spouse have joint accounts, you should be aware that your financial advisors or institutions are not obligated to keep your requests private. The documents you’ll need include:

• Income tax returns for the past three years.
• Statements of your checking and savings accounts in the past year.
• Statements of your investment account in the past year.
• Current statements of retirement accounts.
• Recent pay stubs.
• Ledgers for loans in the past year (mortgage, auto, and personal loans).
• Credit card statements in the past year.
• A list of debts and assets brought into the union and those accumulated since then.

Although divorce can be financially challenging, it doesn’t have to be a complete disaster. Hedge your bets by consulting an experienced divorce attorney who’ll safeguard your finances before and after divorce.