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Divorce is probably one of the most difficult experiences to endure – right up there with death and taxes. But it doesn’t have to be that way. In fact, many couples that decide to call it quits make the conscious decision to do it smartly, resulting in better financial health all around.
At a time when everyone involved, especially the couple, is going through the extremely painful experience of splitting up an entire life as they know it – the last thing that may be on their minds is to smartly manage the financial aspect of their lives. But without proper preparation the consequences can be dire, having lasting negative impact on the parties and of course their children.
You Can Never Be Too Prepared
As emotionally draining as divorce is for most people going through it, it is critical to remain as functional as possible and to make decisions with a clear mind. There are hundreds of areas that need attention and often they are overlooked in the painful whirlwind of divorce proceedings, post-divorce emotional downfalls and the obvious re-establishment process.
Couples typically have their eyes on the key aspects of divorce settlement; the house, the car(s), pets, custody of any children and major assets. But when you delve in deeper into each, there are myriad angles through which things must be considered.
Going Through Each Item, One By One
Follow the checklists linked below to help guide you through each item needing to be done. There are lists that guide you as to the steps to take prior to initiating a divorce. Some of the things on this include listing all current debt, identifying the contents in safety deposit boxes or creating your own savings account.
The checklist of items to take care of when initiating a divorce includes things like deciding which parent will take the child tax exemptions and revoking any power of attorney documents that authorize your spouse to legally act on your behalf.
After the divorce is final, it is important to do things like change insurance beneficiary information if applicable, and change your name on all accounts. There are other vital things to take care of, also mentioned here.
We’ve provided a comprehensive list of documents that you need to prepare in connection with the divorce or of things that are affected by your divorce. The obvious ones are birth and marriage certificates plus not-so-common documents are included as well.
Once you have successfully obtained your divorce there will be some other areas where you will need to report your name change. Some of them can involve long processes, such as passports or a will on file with your attorney.
The checklists are linked here.
How You Handle It Now Will Affect Your Finances Later
Make sure to cancel any joint credit accounts and charge cards, remove one party from applicable debts/liabilities unless they are legally dissolved and equally split up plus also sell the house or get any refinancing done prior to divorce. This will ensure a smoother transition in the end when it is often difficult to communicate with your former spouse after divorce proceedings are complete.
All too often couples going through the difficult time of divorce fail to realize the importance of being financially savvy and making decisions that help everyone overall. Any oversights prior, during and after the process only lead to regretful situations that cannot be rectified after the fact. In my experience over the years, I have often dealt with people who neglected to attend to important financial obligations during the divorce. An example of this is failing to separate a car loan. The result can be very damaging if there is one responsible party suffering the irresponsible person’s management of his/her payments.
Another very interesting and little known fact about divorce when it comes to property ownership – is that unless both parties agree, a refinance cannot take place on a home. Because the child support order is a lien on the property, you need the ex-spouse to sign the subordination. As with everything else mentioned here and on the corresponding checklists – preparedness can and does help you avoid some of the financial pitfalls of divorce. You just have to be savvy enough to know what you need to do and do it before it’s too late.
Last but not least – ALWAYS CONSULT WITH AN ATTORNEY!
Read the full eight page document here.
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