When a marriage breaks up or falls apart it can be very traumatic, and thinking about money may not be the first thing on your mind. But taking a few important steps can be crucial in safeguarding your future finances.
Getting divorced can be very expensive. To begin with, there are the costs of hiring lawyers and dividing assets, and those costs alone can be quite substantial.
And then you have to take into account the fact that living as a single person usually costs significantly more. Because couples share most expenses bills, the day to day cost of living, and child care, they tend to enjoy substantial savings.
This is of course not to convince you away from getting a divorce, but it is to caution you to give adequate thought and consideration to the financial consequences. Be sure that from the outset you do all that you can to minimize financial damage to yourself and your assets.
If you see a divorce in your future, here are 10 steps you should take as soon as possible:
- Speak with a Lawyer: Even if you do not intend to be represented by a lawyer for your actual divorce, it is good to consult with a lawyer right away. Even in the case of an affable split with your husband or wife, it is beneficial to you in the long run to know your options, and more importantly, your rights. If you would have trouble affording this, there are legal services for low income individuals available, just do a little research.
- Check Your Credit Report: Each person can get up to three free credit reports every year. By this means you can see all credit that is in your own name or shared with a spouse. Look out for new accounts in your name, unexpected changes in your credit accounts, or anything else suspicious. Keep an eye on balances of shared accounts if possible.
- Close Shared Accounts: This is important because money can be moved by your spouse away from a joint account and into their personal account. This makes it almost impossible to retrieve the cash that belongs to you. You are equally responsible for balances on joint accounts, even if you have nothing to do with the purchases or spending. Be sure you are the only authorized user of your personal accounts.
- Open New Accounts: It is a good idea to open new accounts in your own name if you did not previously have one, or if all your accounts are joint accounts. It can be helpful to open these accounts with a different banking institution than the joint accounts to avoid errors or confusion.
- Account for All Money: This may be a difficult task if you do not already have all your financial information in one place. You should document all accounts, whether they are separate or joint, with all their information. You should also document property, income, or assets that are jointly or individually owned. Just make sure you are taking it all into account, from vehicles and insurance policies, to furniture or jewelry.
- Consider an Analyst: If you can afford it, it can be helpful to you to hire a divorce financial analyst. These people specialize in finances in relation to divorces. They may be able to find hidden assets, or ensure that your financial information is complete or accurate. They may also be able to mediate with your spouse or ex spouse in case of dispute or financial disagreement.
- Is Your Name on the Deed?: When you own property together it is important that your name is on the deed or title. Even just for practical reasons aside from divorce this is important in case something should happen to your spouse.
- Rewrite your Will: Beneficiaries for bank accounts or other assets are important because they supersede your will if you die or there is another sort of conflict, such as divorce. If you do not want your ex spouse to inherit your money or assets in case something happens to you, it is important to remember to change your beneficiaries and your will.
- Write Up a Budget: It is essential to have a financial plan for how you will adjust your lifestyle to your diminished income. By being mindful of what your needs will be you can be more successful at negotiation of a divorce settlement. There are many things to consider from your child’s future college tuition to retirement of your own.
- Educate Yourself: Before the divorce process even begins, begin to learn all you can about what the process will be like. Otherwise you may not understand what is at stake for yourself or for your kids. There is a lot of information available online depending on what aspect of the divorce you are concerned about, and what you may already know.
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