Heading for Divorce? Five Financial Considerations Before Filing
Life doesn’t always go as planned. When considering divorce, emotions can sometimes take over; however, financial considerations should be a priority before filing. For many, the standard of living may not be the same after divorce, so upfront planning is key.
- Consult a divorce attorney. Many divorce attorneys will give you a free consultation, a list of things to do, or a list of financial documents to be gathered. Understand the laws of your state for division of marital assets as well as spousal and child support. Make sure to bring any pre- or post-marital agreements for the attorney to assist them in gaining a full picture of your situation.
- Gather your financial records. Retain current statements for all bank accounts, retirement accounts, brokerage accounts, loan balances, and terms of loans including mortgage, credit card statements, property tax records, tax returns, current appraisal of real estate, and business interests, if possible. These things will be considered in compiling a marital balance sheet. You may have completed this when you “got your financial house in order.”
- Obtain a full credit report. A credit report may uncover debt that was previously unknown and be important for other items such as purchasing a new home and insurance.
- Review your Social Security benefits. Visit www.ssa.gov to obtain your estimated Social Security benefits that could begin at age 62. There may be instances where you qualify for additional benefits using your soon-to-be ex-spouse’s earnings.
- Create a post-divorce budget. Review all current expenses and determine if the expenses will continue, discontinue, or change after divorce. Think ahead to expenses related to your situation, e.g., children, large upcoming expenses, weddings, premiums (medical, etc.), and college. A good grasp of expenses is the key to knowing what assets and income you will need to receive in the divorce.
It’s important to surround yourself with trusted advisors such as a divorce attorney, financial planner, and accountant. Working with a financial planner before and during a divorce can help create a post-divorce financial plan that works for this new stage in life. The sooner you face your new financial reality, the sooner you can start this next chapter with less stress regarding finances.
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