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Planning Ahead For Divorce Is Financially Smart

Filing for divorce can be emotionally and financially draining, even when the divorce is not a surprise and the couple has been expecting to split. Many couples will wait until children are in school and on a routine to file for divorce. Waiting to file is a good opportunity to get finances in order and create a clearer picture of what the post-divorce financial situation will look like.

For some, divorce is the first time to think about finances outside of the marriage. Stay-at- home parents may make little or no income, making the transition challenging.

Tips to Plan for a Divorce

Planning for a divorce is financially smart. Here are five tips that can help ease the burden:

  • Know the financial situation. While your documents are all in one place, find necessary documentation of assets, income, and debt and make copies. Record valuables and take photos. Make sure that anything concerned with finances, retirement, or valuables is recorded and copied.
  • Track expenses. Make a list of what assets you own and how this is going to affect your life after the divorce. Separate any joint accounts in order to get a better picture of what savings you each have. Finances will be different and it’s best to be prepared.
  • Budget the cost of divorce. Determine the best way to pay for the costs of the attorney on top of all other expenses that will arise, such as finding a separate place to live or a longer commute to work.
  • Watch credit. Good credit is important. Make sure to separate joint accounts and obtain credit cards for these individual accounts. After a divorce, both parties are responsible for the activities in shared accounts, so it is possible for one person to hurt the credit of the other. A credit report will show what accounts are open in a person’s name.
  • Think about the home. Maintaining the home is a huge expense that may not be worth the sentimental value attached. It may make more sense for the other spouse to take the home, or to sell it off and use the money for personal finances.

As each person gains control of their financial situation, it may be beneficial to explore options outside of traditional divorce litigation. Collaborative divorce or divorce mediation are two ways to obtain a divorce that do not require extensive time in the court.

No matter what the situation, setting yourself up for a successful post-divorce life is a primary concern. If a divorce is forthcoming, get prepared by understanding the financial situation and how this will affect your life moving forward.