It’s hard to imagine planning for a divorce as one is usually in the emotional process of the marriage break up and not focused on the financial aspects. Considering that money is the number two cause of divorce in the U.S., perhaps the marriage’s economic condition needs stronger monitoring throughout to ensure that foundation remains strong.
But if you have arrived at the point of no return within the marriage, ensure that you do as much as possible to secure your financial future.
1. Secure funds for attorneys, other professionals and the divorce itself. Plan to have enough funds on hand to pay the professionals and your living expenses for at least three years., A divorce can occur within a much shorter time period; it can go longer. Be prepared.
2. Hire an attorney. Do not try winging a settlement with your ex by yourself. (Especially if you are an attorney.) Rarely does a divorce come as a surprise for either partner and each party is going to naturally view asset ownership to benefit themselves. Divorce is complicated and requires a dedicated and experienced professional who is not emotionally tied to the matter.
3. Collect financial documentation. Gather bank statements, tax returns, brokerage account statements, credit card statements, real estate documents, mortgage applications and contracts, documents related to major purchases, wills and trust information, life insurance policies, etc. While this may appear to be a massive undertaking (and it is), it will prove invaluable during the divorce process. Knowledge is power.
4. Make lists of all known assets, liabilities, real estate, and business interests. You require as complete an accounting as possible in a divorce. Your memory or what you think you own are generally not as reliable as a thorough list of all financial interests.
5. Open accounts only in your name. Open new bank accounts and credit cards, preferably at banks or companies in which you do not have joint accounts. Use completely different passwords than you have in the past.
6. Monitor your credit. Obtain your credit report and review it for accounts you may not know about. Look specifically at the bottom of your credit report to determine which companies have made inquiries into your rating. This may give you an indication of other expenses or assets that your spouse may have secretly secured.
7. Get a secure mailing address and email. You will need a secure address to send the statements for your new accounts, to receive correspondence from your attorney, or to receive other important communication. Do not allow these papers to come to your house, as your spouse could intercept them. For security and privacy, a post office box is probably the best option. Same for a new email address- select a user name and password that is not easily guessed by your ex.
8. Change beneficiaries and decision-makers. You should change your will and your healthcare proxy to ensure that your spouse does not have decision-making capabilities. Likewise, regarding the beneficiaries on your life insurance policies and financial accounts. Do not wait for the divorce to be final to make these changes; anything can happen in the interim.
9. Don’t assume that you will get half of everything in the divorce. State laws vary, and the concept of equitable distribution doesn’t necessarily mean an even split. Pay attention to your attorney’s advice and be prepared to negotiate assets and liabilities with your spouse.
10. Prepare yourself for a lengthy process. Your divorce might be finalized quickly or it might not. You should be prepared for the long-term scenario as it will allow you to negotiate from a position of strength rather than under financial duress. Prepare a plan of action with your attorney and other professionals at the outset of the divorce process and negotiate a payment plan at specific benchmarks so that all parties are prepared to see the divorce through to a fair and equitable division of assets.
Finally, emotions will run high on both sides in a divorce but under no condition should you ever take it upon yourself to follow your spouse to determine activity or location of hidden assets, resort to any sort of wiretapping, hacking into smart phones or other devices. Prepare a timeline of important financial events in your marriage (real property purchases, vehicles, pension participation…) and leave it to your attorney and his investigative resources to locate these assets.
A divorce is difficult for all parties involved. Keep your sites on your future and ensure that you are surrounded by people with the same focus.
BNI Operatives: Situationally aware.
As always, stay safe.