How to Prepare Financially for Divorce

One of the most expensive decisions that you will ever make is to get a divorce. That’s because when you make the vow of “for better or for worse”, “for richer or for poorer”, what you’re essentially saying is that you’re willing to merge everything about your life, including your finances, with another individual. Not just in word, but in print. Yep. One thing that people don’t think about, perhaps as much as they should on the front end, is that a marriage license is basically a marriage contract. So, to get out of what you signed on the dotted line requires some realistic and strategic planning. It’s not impossible to come out unscathed, but to avoid the “Love hurts, love scars” sentiment when it comes to your financial future as a single person, it definitely requires some preparation on your part.

Find Out Your Current Financial Situation

There are so many people (especially housewives), who have entrusted so much of themselves into their spouse that they don’t really know much about their financial situation; so long as the bills are paid every month, that’s all that they’re really concerned about. That’s until it’s time to end the marriage and the discussion of who gets what becomes a bit confusing. Before agreeing to anything (You know, the “I get the house and you can keep the car” kinds of conversations), make sure to personally review credit card statements, bank accounts, financial applications and any estate paperwork. If you’re really new to it all, it’s also wise to sit down with your family accountant (especially if you joint filed on your taxes) to compare your past and current tax returns. Also, in speaking with your own divorce attorney, make sure that the divorce settlement includes you having full access of your past tax returns (to make sure your spouse hasn’t been hiding any sources of income that you’ve been unaware of up until this point).

Itemize Your Spending Habits

A lot of times, people assume that on the onset of a divorce, they should cut back on their spending habits. The challenge that comes with that is if you’re pinching every penny, the judge will take that cumulative budget into account during your settlement. A divorce is certainly not the time to go completely haywire with your spending, but it’s also a good idea to not spend any more or less than you always have and to itemize it all (i.e., keep your receipts along the way) so that the judge can properly assess how much you will need to live comfortably. That said, if there is a financial adjustment that you should make, it would be to save more than you may have been doing in times past. No matter how things turn out, a stable savings account is always a plus.

Know Your Divorce Options

OK, this one is key and it’s also a good reason why you should at least consult with a divorce attorney (or divorce financial analyst). When it comes to the reality of a divorce settlement, there are far more that are settled out of court than in them. And so before taking any legal steps, make sure you’re clear on what you’re really wanting. A legal separation is for couples that are not yet resolved that they want to do something as permanent as divorce; a Pro-Se is for those with limited assets and no children; a mediation are for couples who have issues to resolve that can be settled out of court; traditional divorces are for those who cannot communicate outside of litigation; collaborative divorces are for those who have assets and children and would like their divorce to be as amicable as possible and cooperative is similar except they request mediation in the process.

A big part of what makes divorce so expensive are attorney and court fees so no matter how bitter your situation may be, do all that you can to make a decision that will be financially wise over being emotionally vindictive. Indeed, what sense does it make to have a Travis County divorce that costs a lot when you’re already so emotionally spent? A big part of preparing for a divorce is committing to make it is smooth and quick as possible.