January is often called “divorce month” because more people file for divorce in January than any other month of the year. Perhaps that is due to new year’s resolutions and couples finding the motivation to make a change during this transitional time of the year. Alternatively, many couples fail to get through the holidays in a peaceful way or just no longer see a viable path for their marriage, despite the ‘magic’ of the holidays. Other couples may choose to divorce this time of year due to a cleaner financial split where parties can use annual numbers to make financial decisions.
Regardless of the reason, if you are contemplating a divorce during any time of the year, you should be thinking about financial protection. In this post, we outline ten steps you can take to financially prepare for a divorce.
- Identify all of your assets
If you are contemplating divorce and getting close to making the decision to move forward, begin by taking inventory of all your assets, debts, and liabilities. Do this by gathering digital documents and noting credentials in a confidential place. If you have access, print hard copies of these assets, make photocopies of statements, or take images of anything you might need as your divorce progresses. Any financial document may be helpful to help put together a thorough and accurate picture of you and your spouse’s financial picture.
- Ensure you have account access
In some cases, one party may open or solely own an account and you don’t have access. Now is the time to secure access by inquiring with your spouse about logins or getting your own credentials by contacting the relevant bank, investment firm, or other institution.
As a reminder, it is very important not to hide assets or make them inaccessible to your partner during this time. You may have a head start on reviewing the finances if you are preparing or anticipating a divorce, but making it difficult for your partner to discover and access accounts will be frowned upon by judges and attorneys once the divorce process has started.
- Check that your name is on titles and co-owned assets
Double-check any co-owned properties, vehicles, timeshares, and more to ensure you are listed on the title. This can save you time and headaches if you find out that you are not an official “co-owner” and have to get added to these documents during the divorce process. Being on title protects your wishes by requiring your authorization to initiate any changes.
- Run a credit report
A free service can help you understand what your lending power will look like in the future and any changes you might need to make to improve your score. It will also help you understand what your options might look like to take out your own home and vehicle loans in the future.
Running a credit report before and during the divorce process can also let you know if someone has taken out credit in your name (or jointly) without your authorization which can dramatically affect your ability to attain credit when needed at appropriate interest rates.
- Open new accounts in your name only
Since you’ll no longer co-manage accounts with your spouse, it’s important to establish your own financial identity sooner than later. This means opening up new checking, savings, and credit card accounts. Be sure to choose new usernames and passwords to ensure your spouse can’t access these new accounts as you begin your transition to financial independence.
- Open a PO Box and new email account
A private way to receive mail during your divorce process that you might not want your spouse to see, a PO box can serve as a confidential destination for sensitive mail and can give you added privacy during this time. Chances are, your spouse knows how to access your email after years of marriage, so opening up a new one is a smart move. Not to mention, having a new email address can feel like a fresh start.
- Hire a financial planner
A Certified Financial Divorce Analyst (CFDA) is the most qualified specialist to help you sort through your finances during the divorce process. From outlining a current and future budget to helping guide you through tough financial decisions, a CFDA can educate you throughout the divorce process and help you achieve the financial outcomes you desire.
- Review spousal social security and health care requirements
Depending on how long you were married, it is important to understand if you would qualify to receive social security benefits or if delaying the divorce may provide the qualifications required. Similarly, you may need to secure your own health insurance. Knowing what to expect before you file by reviewing and considering future health, social security, and life insurance needs will help you better prepare. For instance, you may be eligible for Cobra health insurance and life insurance may be easier to secure while married and ‘getting along’. By planning ahead and researching options, you can protect future support payments that may be hard to get with an ex-spouse if your situation becomes high conflict.
- Start thinking about the big decisions and document details
From parenting plans, to what you want to do with the house, to spousal support needs, and how you’ll tell the kids, your families, and everyone else, there is no shortage of big decisions to contemplate during this time. Alongside weighing the pros and cons of the big choices, don’t miss the details. Write down any details you can during this, while your spouse is still communicating with you, especially prior to filing. A dedicated notebook with details about what your partner may have mentioned regarding an asset or comments he or she made that are notable could be helpful as you progress through the divorce process. Use this to make lists of to-dos and thoughts on important decisions so it’s easier to recall certain details that you may need in the future. On a related note, interviewing divorce coaches could be helpful during this time. Also, don’t feel like you need to make all of these decisions as the professionals you hire will help support you in making the best decisions for you and your family.
- Interview attorneys
Now is the time to find an attorney who is a great fit for your needs and desired outcomes. Asking the right questions as you interview attorneys can make all the difference in your settlement. From inquiring about their experience to communication styles, most attorneys offer a free consultation where you can dive deeper into the details of your situation and find someone who you feel can truly help.
At A.M. Financial, we provide expert guidance on the financial side of divorce and guide you through important steps to protect your finances. As a Certified Financial Divorce Analyst, we have a deep understanding of the financial decisions required in the divorce process and financial planning needed to reach long-term goals. Contact us for a free consultation.