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Preparing for Divorce: 7 Key Financial Tips When Facing Divorce

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Preparing for Divorce: 7 Key Financial Tips When Facing Divorce

Even though over 90% of people get married by the time they’re 50, around 40 to 50% of United States couples end up getting divorced.

Since 1990, the rate of couples who get divorced after age 50 has doubled in the United States.

But even the richest of people who get divorced say that it’s financially draining. Some studies even say that it can lead to weight gain, especially amongst men.

If you’re not careful when preparing for divorce, it can wreck you financially.

And that wreckage can go on to affect you for the rest of your life. So why not be prepared?

Keep reading to learn 7 essential financial tips to use before you complete your divorce.

1. Build Your Team

Divorce is not only complicated financially, but it’s also emotional.

The most crucial person to have by your side throughout a divorce is a professional divorce lawyer you can count on.

You need someone to fight for you in ways that you can’t handle yourself and to make sure that you’re not left in a bind financially.

Another way you can help yourself out is to get a therapist.

Divorce is emotionally draining and having someone you can talk to during the entire process will allow you to make decisions carefully and objectively.

Lastly, there’s nothing wrong with getting yourself a certified divorce financial analyst to look things over either.

2. Pull a Copy of Your Credit Report

During divorce proceedings, credit reports should always get reviewed.

There could be something on there you thought you left behind, which is why spouses should look with their attorney to see if there are any accounts or loans they don’t recognize.

It’s important to know what debt has been incurred throughout the marriage and to make sure you aren’t held responsible for any you had no idea about.

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3. Gather All Your Documents

Your marriage’s financial health is revealed in your financial records. Gathering documents takes time and effort, which is why you should start as soon as you know the marriage isn’t standing the test of time.

Your financial institutions and advisors for accounts you and your spouse share don’t have to keep things confidential, so get those records as soon as possible.

Here are the many documents you should start preparing:

  • Checking and savings account statements
  • Retirement account statements
  • Investment account statements
  • Credit card statements
  • Income tax returns
  • Recent pay stubs
  • List of debts and assets brought into the marriage
  • List of debts and assets accumulated since marriage
  • Ledgers for any loans, including auto, personal, and mortgage
  • Appraisals for valuable items

Put together all the assets and liabilities you have in a balance sheet.

4. Start Establishing Credit for Yourself

Whether you have some credit, no credit, bad credit, or fair credit, get a credit card for yourself and do whatever you can to boost your credit.

If you don’t have any accounts in ONLY your name, it’s possible your credit score will drop after you finalize your divorce.

If you want to know how to prepare for divorce financially, one of the vital things you can do is take ownership of your credit score and report.

Just make sure you don’t rack up any interest charges or accumulate more debt than you can pay at the end of a given month.

5. Don’t Make Any Drastic Changes

While it might be tempting to adjust your life insurance beneficiaries or change a will or retirement account, don’t do it.

Everything is going to come out, and if you make changes in secret or in haste, a judge might dock you for it. They might even award your spouse for it.

And if you’ve already filed, making changes without an ok from the court could be grounds for criminal contempt.

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Ask your attorney about anything and everything before you make a change.

6. Be Careful with Your Money

Depending on the state in which you live, your assets, income, and debts may be all part of one single pot.

Don’t empty it or dip into it more than usual right before your divorce. While you might think it’ll help in the long run, it could be detrimental to your case.

Use your accounts as usual. Talk to your spouse about both of you being conservative and how to proceed while you get through the divorce.

If you can’t work together, ask your attorney about legal separation, which would tell you both how to use your money before the divorce is finalized.

Check out this article for other common divorce questions.

7. Prepare for Resistance and Get Help

If you haven’t already, get a divorce lawyer to work with you during your divorce.

It’s not aggressive. It’s proactive. You’d be surprised by how even the most level-headed people lose their minds during a divorce battle.

And whether you and your spouse are at odds or you get along just fine, it only makes sense for both of you to have your own divorce lawyer.

Preparing for Divorce Is Difficult

Preparing for divorce is many things. It can be emotionally draining, physically exhausting, a huge relief, and a financial strain all in one.

The best thing you can do for yourself is to hire a lawyer to get you through it, so you aren’t left in a financially-compromising place when it’s all over.

And if you have the means, get a therapist and a financial analyst to make things even smoother.

And remember that you aren’t alone. Lots of couples get divorced every year. Just make sure you’re not one of those people who end up with the short end of the stick financially.

Check out other articles in our lifestyle section for more advice about law and family.

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