If you're anticipating beginning divorce proceedings in the near future, then it can be hard to focus on your practical needs. However, one of the most financially destructive events in a person's life can be a divorce. If you take some steps to protect your financial health, then you'll be in a better position to recover from the economic losses that divorce can bring.
Here are five things you can do to help keep your finances afloat as you prepare for and initiate divorce proceedings.
1. Hire a Lawyer to Handle Financial Challenges
Even if your divorce is amicable, it's a good idea to contact a lawyer just for the financial assistance you might need. You might not feel like you need to worry about who can spend time with children or which property belongs to which person, but dividing up assets can be legally tricky, especially if you own a home or share debts.
You don't want to be the one who loses equity. For example, when you co-own a house, you could lose equity if you're the first one to move out. Your lawyer can help you get the equity you are entitled to or help broker the sale of the house so the asset can be divided in a simpler process.
Some debts, like credit card debt, could ruin your credit score or cause you years of payback if you do not have a lawyer to help you negotiate with creditors and assign responsibility.
2. Open Your Own Accounts
As soon as possible, open accounts that are only in your name. You'll want to start cashing your paychecks into your own personal account, instead of into an account that is shared by your spouse. One reason to open your own account is that a spouse can drain common accounts, leaving you with nothing, and fixing this can be difficult.
If possible, close credit card accounts that are in both of your names, and get a new card in your own name as soon as you can.
3. Collect Information on Debts and Personal Assets
You'll want to gather as much information as you can about debts and assets. You'll need things like loan terms, origination amounts, and interest rates. If you filed taxes together, then get copies of your tax returns from the IRS if you don't already have it filed away.
Review taxes with an accountant. You might want to change your withholdings, especially if you can no longer claim children as dependents on your new tax return. In addition, you'll want records in case you need to file for injured spouse if your partner did not pay student loans or taxes while you were married.
4. Make Changes to Your Estate Plan
Another reason you'll need a lawyer is to make changes to your will and living will. For example, if you had previously given your ex-spouse power of attorney over your medical decisions or over financial choices in a living will, then you might want to change to a different person now that your marital status has changed.
The assets you possess may also change, which means changing your last will and testament to reflect those changes is necessary. For example, if you sold a house that you owned a result of your divorce, then you can't pass that asset along in a trust or to another relative.
You may also want to name different guardians of your children if you have sole or primary custody. If your spouse was intended as executor of your estate, that's another thing you may want to change.
5. Adjust Your Retirement Plans
Finally, speak with your lawyer about retirement plans. Many Roth IRA, pension, and 401K plans are considered to be joint property, so you may not have as much in savings for retirement after the assets are divided during your divorce. You may need to begin a new investment profile to help you meet your retirement needs.
Divorce affects every aspect of your life, including your finances. Contact us at the office of Mary E. Papcke, Attorney at Law for more information about divorce proceedings.