As a family law and divorce attorney, I oftentimes hear from clients that they have been unhappy in the marriage for months, or even years.
I am still surprised that although these clients “know” divorce is on the horizon, they do little to nothing to prepare financially for their divorce.
This is a mistake.
As a result, I prepared the top 5 things to consider financially when planning for divorce.
During a divorce, finances will be divided between the parties.
Although the parties are required disclose their financial position through a financial affidavit and mandatory disclosure, it is beneficial to have this information at your disposal prior to filing for divorce.
Print and save tax returns, personal bank statements, business bank statements, brokerage statements, retirement statements, appraisals, credit card statements, as well as inventory any assets and liabilities, specifically cash reserves.
This is especially important when your spouse runs his/her own business, is a 1099 employee (not a W2 employee) and/or deals primarily in cash as these numbers could be manipulated in divorce proceedings.
Do not assume your spouse will truthfully disclose his/her financial position.
Depending on your individual case, you may want to close down joint bank accounts and/or credit cards.
You do not want to be in a situation where your spouse can rack up huge bills in your name and drain the bank accounts.
You also do not want to be in a situation where your spouse cancels credit cards and leaves you without access to funds. It is oftentimes beneficial to open up your own credit card and begin to accumulate cash reserves.
Cash WILL “disappear” quickly once divorce proceedings are initiated.
Assume that your spouse is also preparing for divorce and he/she has consulted with a family law attorney.
If you spouse out of the blue asks to you to refinance the house, refinance the business, transfer title, take your name off the business, use non-marital monies for a major purchase, sign a post-nuptial agreement, etc., this is a big red flag.
Do not sign or transfer anything until you consult with a family law attorney.
This one is self-explanatory.
Change your passwords so your spouse cannot view your personal information.
Create a new email address so you can communicate with your family law attorney and friends about your case without fear of spying eyes.
It is beneficial for you to keep your expenses down as long as possible before the divorce is finalized.
Paying for two of everything (2 rent payments, 2 electric bills, 2 water bills, 2 cable bills ….) can add up very quickly. This can devastate the parties’ financial reserves.
It is usually preferable to “keep the train on the tracks” without increasing your expenses. Also, in our experience, divorces seem to get resolved quicker when both parties reside in the same residence as both parties have an incentive not to “drag their feet”.
Rule of thumb is the party residing in the house typically has an incentive to bog down the timeline.