Divorce, in all its complexities and emotional upheavals, can be made simpler, easier and less acrimonious with preparation and organization. Here are three key steps to help you prepare for your divorce.
If it is really, really going to happen -- if you and your spouse just can't see yourselves continuing in this journey of marriage -- then it's time to get realistic about preparing for divorce.
I'm not suggesting that divorce is a simple solution to a very complex problem: you can't prepare for it as you might prepare for a move into a new house (though that is also a likely transition you'll need to manage). I am suggesting that divorce, in all its complexities and emotional upheavals, can be made simpler, easier and less acrimonious with the right amount of preparation and organization.
And so with that, let's start at the beginning and give you the three steps to prepare for your divorce.
Step 1: Take a Financial Assessment.
You've no doubt analyzed your feelings about this impending divorce over and over again. You've probably tried counseling or some sort of support mechanisms. (If you haven't we suggest that you try!) You've had gut-wrenching discussions and have assessed how you will feel about being separated from your spouse. Well, now it's time to do the same process about your finances. It's time to get realistic.
Gather all of your financial statements and organize them in one place. When I say "your", I mean those in your name, your spouse's name and joint names. Consider purchasing a multi-section portable file folder to help keep you organized as you work through this step. You'll need:
• Mortgage Statement, including any Home Equity Loans and purchase information
• Retirement Account Statement, as well as 401k's, pension plan statements
• Credit Card Statements
• Checkbook Registry for the last year
• Any other long-term debt account statements you may have, including car loans
• Bank account and investment account statements
Pull all of the paperwork together so that you can develop an overview of how your money was spent last year and what needs to be paid in the coming six to twelve months.
Then, get the highlighter out and highlight those expenses that you'll take with you upon divorce (e.g., if it's your car, then assume the car payments will go on your side of the ledger). Don't forget those pesky annual or "as required" bills -- like insurance and repairs.
Then add to that list new expenditures you know will be coming up in the next 24 months (e.g., braces for little Tommy or college tuition for Beth).
Pull it all together, take a breath and walk away for a few days. Over those few days, more things will come to mind. Write them down, then start tracking down the documentation for them.
Step 2: Align Yourself with Professionals
- Is this going to be an acrimonious divorce? Or will my spouse and I cooperate?
- Do I already know about all of our household and personal finances? Or do I suspect that I may be out of the loop on some assets, debts or income sources?
- Do I trust my spouse to be cooperative and forthright?
- Do I have any reason to believe that I will feel intimidated by my spouse during these proceedings?
- Are we both focused on the wellbeing of our children?
If you believe that you and your spouse will cooperate and will have joint best interests in mind while negotiating, then you might want to choose a divorce mediator or embrace a collaborative divorce. Those options are less costly, more private and usually result in a more peaceful settlement process. However, if you're not certain about finances, or cannot trust your spouse to be completely above-board and cooperative, then you might hire a traditional divorce attorney, who will only have your interests in focus while they help negotiate the complexities of your divorce.
Legal help is only the first step. Generally speaking, attorneys are focused on the legalities of your divorce, and while many are well-versed in understanding your finances today, they are not experts in how today's finances translate into your future. Bringing a Certified Divorce Financial Analyst (CDFA) into the picture helps ensure that your financial settlement works for you both today and down the road, as your needs and life-stage change.
Finally, round out the professionals you involve in your divorce with a therapist who is experienced in the divorce process. You'll encounter new emotions, new fears, new adventures and a "new you" as your divorce unfolds. Having someone by your side to help guide the personal aspects of your divorce will help you to keep focus -- which in turn makes you better prepared for both the legal and financial sides of negotiation.
We have all heard the adage, "it takes a village to raise a child." Don't forget that it takes a team to guide you through this life-altering transition.
Step 3: Take Care of Your "Must-Do" List
- Take care of necessary medical and dental issues now -- before your health insurance may change -- not only for yourself, but also for your children, if any.
- Have a technician go through your car with a fine-toothed comb to identify any repairs that may be needed so that you are not caught off-guard with large expenses after your divorce.
- If you are keeping your house, do the same -- get an inspection, go through and make a list of necessary repairs, get an assessment on your furnace and AC and be sure to take a look at the roof and windows -- knowing what to expect goes a long way in preparing for your financial future.
Taking these three key steps will help to prepare you for the weeks and months ahead as you move through your divorce process.
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