The financial side of divorce can feel intimidating at first, especially when already facing the emotional and mental stress brought about by such an enormous life change. For even the most amicable of couples, divorce can be an overwhelming process.
Harden Law advises that financially preparing for divorce involves understanding your current financial situation and organizing all relevant documents. This proactive approach helps individuals regain control and reduce stress during an overwhelming process, especially since the average cost of a divorce nationwide is around $15,000 per person. By diligently tracking expenses, income, and documenting assets and liabilities, individuals can confidently navigate proceedings and protect their financial future.
The average cost of a divorce nationwide, per person, is around $15,000 and, though yours might fall below that number, you can expect to be shelling out funds for legal fees, child support or alimony, and possible real estate. On top of that, most people often see a decrease in their standard of living following a divorce.
In order to regain control and a sense of calm, it is advisable to start preparing your finances as soon as you know you will be going through a divorce. Take these steps to put yourself in the best financial position possible so that, when all this is complete, you can just focus on you.
How Can You Become Familiar With Your Financial Situation During Divorce?
To become familiar with your financial situation during divorce, begin by tracking your expenses, reviewing past bank and credit card statements, and documenting all income. Your attorney, mediator, or judge will require comprehensive information about your household finances to facilitate agreements on asset and liability division, as well as future expenses, especially when children are involved. This detailed financial overview will also be crucial for determining child support and alimony payments. Documenting assets and liabilities acquired during the marriage, as well as non-marital assets (like pre-marital acquisitions, gifts, or inheritance received solely in your name), will help you confidently navigate proceedings and protect your financial future.
As soon as possible, begin keeping track of your expenses. Review past bank and credit card statements to get an accurate idea of what you put out each month. Keep records of the income you bring into the home. The more detailed the budget, the more confident you will be during divorce proceedings.
In addition, document the assets and liabilities you and your spouse obtained while married. These will end up being divided in whichever way is agreed upon. Then, determine the assets and liabilities you acquired before the marriage, as well as gifts or inheritance received solely in your name during the marriage. You will claim these as non-marital assets that you will be able to keep following the divorce.
What Financial Information Should You Gather for Divorce?
When preparing for divorce, you should gather comprehensive financial information including pay stubs, bank account statements, credit card statements, tax returns, mortgage statements, records of any debt, retirement account statements, wills, and investment account statements. Locating and organizing all this information in one place is a crucial part of becoming familiar with your financial situation. Having everything readily available and accessible will save significant time during actual divorce proceedings when a judge, mediator, or attorney requests it. Assembling these documents will provide you with a clearer understanding of your financial standing and a greater sense of control throughout the process.
When gathering your information, be sure to include:
- Pay stubs
- Bank account statements
- Credit card statements
- Tax returns
- Mortgage statements
- Records of any debt
- Retirement account statements
- Wills
- Investment account statements
By assembling all this information, you will end with an even better idea of your financial standing, and a greater sense of control to take with you through this process.
Create a Safe Financial Space
Even with the best intentions, divorce proceedings can often result in hostility and anger. For that reason, ensuring yourself access to your finances is paramount.
Opening a P.O. box allows you to have a place to receive mail, specifically from attorneys, and bank statements without anyone else being able to access them. If you haven’t already, consider opening accounts under your name so that your paycheck can be deposited into an individual account and you can work on building your credit. However, before moving any money around, consult with your attorney to make sure it is in your best interest.
In any divorce, the parties will likely have to endure a major life shift, and a resulting financial one. While preparing your finances for what can be a stressful process, take the time you need and consider your mental health along the way. Working closely with an attorney and seeking counsel and guidance when necessary can give you that extra bit of confidence you need to make the process a little easier.
