Divorce is a difficult process in all aspects. It's emotionally trying and can be financially draining. You need to protect yourself and your children, if any, from the financial blow that the divorce can bring. Without preparation or early guardrails in place, divorce can be a messy battle financially. While there are really no winners in divorce, the process can be done amicably, with the couple dividing properties and other assets in the most beneficial way for both parties.
Here are steps you can take to help protect yourself financially during a divorce:
Know all your financial details. It's relatively common that just one spouse knows all the financial assets, documents and account details of the family. One spouse is usually in charge of keeping these money-related items in order. Be proactive and keep your own record of financial documents, policies, account numbers and online passwords for safekeeping. If you own property, make sure you have a copy of the deed.
Cancel joint credit cards. Inform your partner first that you're canceling joint credit cards for security reasons. Some angry spouses may spend heavily or max out the cards to get back at their partner. If you're going through a divorce amicably, you can cancel the cards together. If you're not on good enough terms to meet, inform your spouse over the phone, then call the bank immediately. It's best to document the cancellation by sending a fax or email to the bank saying that your divorce is ongoing and you want to either cancel the card or remove your name from the account. You need to state clearly that you are not responsible for future charges effective immediately.
Sell joint properties. Liquidating assets can help secure your financial future. Your house may have sentimental value, and it might be very tempting to keep it. If you do decide to keep it, double-check your budget as a single person and make sure you will have enough income to afford it. You may opt to sell for the flexibility that money provides. You might even end up getting a better house at a lower price with the money you get from the sale of the joint property.
Keep track of all your debts. This is important especially with couples living in community property states, which dictate that you not only have the right to half of your assets but also have ownership of half of the debts incurred during your marriage. Make sure that there are no debts that you're unaware of. This often comes as a nasty surprise for divorcing couples.
Have your own bank account. Make sure that you're not solely dependent on joint bank accounts. While married, you may consider opening an independent account for emergency purposes. Regularly deposit to that account as a safety net in case divorce happens. Some spouses drain joint bank accounts as soon as the other party mentions separation. This can put the other party in a difficult financial situation. Don't let this happen to you.
Do not hide assets. During a divorce there is a legal process called "discovery." It is the way divorcing spouses get information about each other's bank accounts and other financial details. During this process, you turn over—under oath—all relevant financial information. Lying can get you in trouble for perjury. Don't do it.
Get legal and financial advice. Get a lawyer or mediator to help you with your divorce proceedings. A good lawyer might come at a high price tag. You might want to consider getting a mediator instead, especially if you and your partner are on speaking terms. It's also important to consult with a financial advisor to guide you in your financial decisions during and after the divorce. Third-party advice can be of great help especially during this emotional time. A professional can help you see your situation objectively and pragmatically.
There's no easy way to go through a divorce. Open communication with your partner can help you navigate the financial aspects of the divorce more smoothly. Don't hesitate to ask for professional advice on these matters. Remember that there's life after divorce and that you need to have as secure a financial footing as possible to move forward.