It’s a messy process to divide the money between two spouses who intend to get a divorce. This is why you should prepare your finance before you are awarded child or spousal support. Of course, every divorce is a different story, so only experts that are familiar with your specific case can give you the best advice. Still, you should consider using the following tips.
1. Track your expenses
The moment it becomes clear that divorce is a sure thing, you should start tracking all of your household expenses, as well as the income. It will useful for two reasons: first, it will help you identify how big your budget will be after the divorce, and, secondly, it will determine how the judge will decide to split the assets, as well as the debts, but also whether child or spousal support will be awarded.
Regarding your budget, include all your household bills, food and clothing, home maintenance and child care, along with any other expenses that you have. Also, check your credit card statements to see what your spending was in the past year. It’s important to include your holiday trips and one-time expenses like buying a new TV.
2. Avoid big financial decisions
There will be big financial changes when the divorce proceedings began. You may want to adjust your life insurance beneficiaries, but they will all be changed in the proceedings, so no need for that. If you make changes before the divorce, it’s possible the judge will award your spouse. If the divorce has already been filed, the changes could be taken as a criminal act.
3. Gather documentation
It will take you a considerate amount of time to gather all the documents that represent your financial records. The first thing you need to start with is all of your savings account statements from the past year. Next, gather your current retirement account and then investment account statements from the past year. Regarding the past year documentation, you also need to collect ledgers for your mortgage, auto loans and personal loans, as well as credit card statements. Finally, collect your income tax return from the past three years and all lists of assets and debt that you have brought into the marriage, together with those that accumulated during the marriage.
4. Be frugal
Separating you and your spouse’s mutual finances is messy, and a big chunk of this process will be affected by the state laws. In some states, all the assets, debts and income will be seen as one item. So, spending from that account months before the divorce is not recommendable. This is why it is also important to be very clear and open with the spouse regarding the financial matters.
It’s best to keep using your individual and joint accounts as usual. In case you don’t have money on the side for hiring a lawyer, make an agreement with your spouse to spend a conservative amount (both of you, of course). If an amicable divorce is not the case here, then ask your lawyer about a potential legal separation – that way, there would be clear rules on how both of you can spend the money until the finalization of the divorce.
5. Ask for the right help
No matter whether your divorce is adversarial or an amicable one, it is smart to have a good lawyer that will lead you through the process of separating your finances. Hiring a lawyer shouldn’t be taken as a sign of aggression because almost every divorce is too specific to be left to the spouses only. In Australia, for example, couples that filed for divorce regularly hire lawyers to help them deal with the situation, without making it look malicious. Many family lawyers in North Sydney stress out the importance of having an open discussion between the spouses and having a clear financial plan for each of them. In addition, you can also consider consulting a divorce financial analyst to give you a thorough analysis of your future financial status.
6. Don’t take financial advice from people close to you
The moment people close to you find out you are going through a divorce, they will rush to offer you some advice. Divorce is a common thing, so everybody will want to share a situation they have heard about or they have gone through personally.
However, you need to understand that listening to their advice (no matter how good-natured it is) could only make the matters worse. Every divorce is unique, so nobody can give you the advice you need. The best thing is to use your friends and family only as an emotional support, and leave the legal advice to the professionals.
Divorce isn’t an easy thing at all, so it’s important that the financial aspect of this process goes as smoothly as possible. Having your finance in order will at least partially ease the divorce.