August 4, 2011

Divorcing – Important Financial Steps

Posted in Divorce tagged at 2:28 pm by demetriagraves

When working with clients who are considering divorce, many people say that, they don’t know where to start and of course, embarking on a divorce is a major step in one’s life and shouldn’t be taken lightly. Often, clients I work with are concerned about protecting their assets and the financial implications of a divorce. So I thought I’d cover some important financial steps that should be considered as vital preparation steps when deciding to move forward with a divorce.
1. Take inventory of all financial documents and records. It’s critical that you immediately gather all your financial records, including bank account information, mortgage statements, credit card bills, wills, trusts, etc. Make copies, and then find a secure place to keep them. Don’t keep these records in your home. Take copies to a trusted friend/family member, or use a safe deposit box that your spouse can’t access.
2. Begin securing funds for legal and other professional fees. If your spouse controls all access to the family funds, this can make it difficult (if not impossible) for you to have the resources necessary to get the legal help you may need. Unfortunately, choking off the money supply is a common tactic, one that often forces one spouse to sign a divorce settlement agreement that is totally lopsided in the other spouse’s favor. Avoid this kind of financial squeeze. Be proactive. Make sure you have funds that are secure and available only to you.
3. Open new accounts in your name. Don’t use the bank where you have your joint accounts. Go to a different bank, and open a new checking and savings account in your name. Your divorce attorney may instruct you to withdraw up to half of your joint funds (state law will dictate what you can and cannot do), and you’ll need to deposit those funds in your new accounts. Open a new credit card account in your name, too. Proceed with caution, but do proceed –moving forward as a single person will require that you establish good credit and solid financial footing.
4. Get a copy of your credit report. And, consider monitoring it, too. By keeping an eye on your credit report, you’ll know if your spouse is running up charges on any joint credit cards, or if they’re dissipating marital assets in some other way. Plus, you’ll also be able to keep tabs on your all-important credit score.
5. Open a post office box. Once you have hired a divorce attorney and have opened new accounts in your name, etc., you’ll be receiving mail that you will want to keep confidential.  Open a post office box, and give yourself peace-of-mind knowing that your mail is being delivered to a secure, locked box that only you can access.
6. Change your will, medical directives/living will, etc. Most states won’ t allow you to completely disinherit your spouse until after the divorce is final. But, you can take steps to prevent them from making medical decisions on your behalf or inheriting all of your assets should you die before the divorce agreement is signed. Remember, you’ll also want to change beneficiaries on life insurance policies, IRAs, etc.
At first, divorce can seem overwhelming. But, completing these six steps will go a long way to help you feel more in control and better equipped to make thoughtful, reasoned decisions. You want to emerge from divorce in the best shape possible, with your assets protected and a sound long-term financial plan in place. If you are considering divorce and would like some more advice on what’s involved and how best to move forward, I offer a free initial consultation where you can get all your questions answered.
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