Itís neither a pleasant nor a hopeful subject, but a necessary one. Half of married Americans either have or will experience a divorce. Thatís difficult enough, but when divorce is also financially devastating, it can seriously frustrate efforts to move on.
In addition to finding an experienced divorce lawyer, careful planning and a few extra steps can mitigate or prevent some of the pain.
1. Save. Even friendly divorces are expensive; both spouses tend to, at least for a while, experience a lower standard of living while building a new life.
2. Separate finances and monitor your credit report. Identity theft and vengeful, or simply ill-advised, spending are common during a breakup. Emotional upheaval can affect even the nicest people.
3. Inventory, copy important documents. Make a list and collect copies (with current amounts and account numbers) of accounts and valuable assets, bank, credit, CDs, pensions/IRAs, investments, and other account statements, as well as tax returns going back a few years. Youíll need to close joint accounts (but get legal advice about when and how; thatís important), open separate ones, and change names, beneficiaries, and other information. Youíll need several certified copies of the divorce decree.
4. Will, living will, powers of attorney. Locate the originals; youíll need to make new ones (once those are executed, give copies to any applicable trustees etc. and donít forget to rip up the old ones). A good estate attorney is useful here, especially in cases of property or wealth accumulation, or if your situation is complicated.
5. Passwords, usernames. Make a list of online financial accounts, stores, subscriptions, cards, health care portals, and any other sites with financial or identifying information, which will probably need to be changed. Typically, the only way to fully separate pre-existing, joint debts and liabilities, even after divorce, is to pay off and close accounts. Consider whether both spouses had access and determine what you may want to change.
6. Inventory physical assets. This is only partly about value and fair divisions. Creating a list also helps you locate and remember which items of sentimental value you want to keep.
7. Insurance policies; health providers. Names, passwords, and beneficiaries, as well as emergency contact and privacy/information releases probably need to be changed.
8. Refrain from (and watch for) new commitments, big purchases, asset changes, or debts. And keep checking your credit report, even after the divorce is final, until all accounts and liabilities are fully financially and legally separate.
9. Best not to bill-share. No matter how much you trust, divorce financially, too. Itís simply not a good idea to drag out payments or agree to pay off a card balance together. Have debts paid off right away as much as possible, accounting for it in the divorce settlement. Life and attitudes change, new relationships complicate things, and itís hard to move on from someone youíre financially tied to.
10. Make a new budget. Odds are you canít spend the way youíre used to, at least for a while. If you canít afford an accountant, budget calculators may help. Quickenís basic categories give you an idea of where to start (Quicken.com/budget-calculator); NerdWallet helps prioritize them (Nerdwallet.com/blog/finance/nerdwallet-budget-calculator).
ďDivorce: A resumption of diplomatic relations and rectification of boundaries.Ē ó Ambrose Bierce
Sholeh Patrick, J.D. is a columnist for the Hagadone News Network who survived this process and found happiness. Contact her at Sholeh@cdapress.com.