One of the main issues that couples battle over in a divorce is money. It really is no surprise since money is at the center of many of the litigated issues in a divorce such a child support, spousal support and the division of assets and debts. As a family law attorney, I can't stress enough how important it is to be aware of your financial picture during the divorce process. If you decide to bury your head in the sand and refuse to educate yourself about your finances, you really are placing yourself at a disadvantage.
So, practically speaking, what does it mean to be mindful and savvy about your financial picture? Here are a few things to keep in mind so that you're in a better financial position both during and after your divorce:
1. Become A Master At Organization:
I've said this before in previous blog posts, but it's extremely important to organize all your financial documents during the divorce. For example, think about keeping separate files for each separate account that you have. Print out important documents that reflect money in your separate and joint accounts during the marriage and post-separation so it's clear what is your money and what is shared money with your spouse. When you begin the divorce process, you and your spouse will need to exchange numerous financial documentation related to your bank accounts, investment accounts, retirement and credit card accounts as part of your fiduciary duties owed to one another. If you are organized, the process of providing such documentation to one another will not be so overwhelming.
2. Be In The Know:
When you are organized, you will have a better understanding of what accounts you have and how much money you have to your name, along with any debts that are owed. In divorce, your financial picture changes drastically because you are no longer partnered with someone who may be contributing to your monthly income. If you are educated about your personal finances, you are better positioned to figure out a budget and create a plan for your financial picture after the divorce. This is especially important if you have children and there are unexpected costs to consider as they grow up. You may want to look into accessing your credit score so that you know what debts are associated with your name. Also, be mindful of any gifts you receive from family or friends as these may be considered income in your divorce.
3. Open Your Own Accounts:
When you're going through a divorce, income earned after the date of separation is considered your separate earnings. As such, you may want to consider opening up separate accounts so that your earnings will no longer being commingled with community property finances that have yet to be determined and divided. This will make the division of property a lot less confusing and you will be able to keep track of what's yours.
Finally, you may want to consider hiring a financial planner to help you organize your accounts and figure out the best way to budget for your future. Divorce can startle even the most financially stable individual since it separates a household into two and many times, individuals are faced with supporting their family on one income alone rather than having the luxury of two supporting incomes. Budgeting your finances and being mindful of how you spend will be key in creating a foundation for a healthy financial picture going forward.