Recently updated on March 27th, 2022 at 02:59 pm
Divorce can affect every aspect of your life, including your finances. Money and financial assets are one of the most heavily contested issues in a divorce. If you are even thinking about divorce, you should take some time to prepare from a financial perspective. You can use the following tips to get the process started.
1. Examine Your Budget
If you are contemplating divorce, it is never too early to consider and prepare for the financial implications. You need to plan for how you will live and support yourself and your children, after the divorce. Is your partner the breadwinner? Are you employed? If you are not employed, can you be immediately employable? If not, what do you need to do to become employable? Perhaps you should take those steps before starting the divorce process. If you are the primary income earner, your financial decision regarding divorce may be easier, but the financial impact will still be very real.
Do you know how much it costs for you to maintain your current lifestyle? Do you have a budget? In many households, one spouse or the other takes care of the budget. He or she may be acutely aware of which bills are due and when, but the other spouse may be entirely in the dark. Some spouses have never made a budget. If you are not up to date on what it costs you to live every month, you need to get that information and make a preliminary budget.
If possible, look at how your spouse does the budget. Consider which bills will stay with you and which bills will go away in a divorce. You may only be able to estimate your monthly living expenses, but it is essential to at least have this basic knowledge.
When making a budget, be honest. Be truthful about your expenses. If you are a gift-giver, remember that you need to account for funds to pay for gifts. If you have a cleaning service, you need to budget for that item. If you have pets, include their costs. If you take a vacation away from home every year, divide the cost of the trip by 12 so you have your monthly expense for travel. It is easy to leave out items that sneak up on you once or twice a year. Be careful to include everything so that you have an accurate picture.
2. Create an Emergency Fund
You should start setting aside some funds for individual emergencies, whether that is for unexpected expenses in the divorce or for expenses associated with your children. When you start considering divorce, it is a good idea to have money readily available. You can also use this money to retain an attorney.
This is different than hiding money from your spouse. This is for YOUR immediate survival in case you encounter financial obstacles from your partner when you file for divorce.
3. Gather Documentation and Information
Your financial records will be helpful in going through the divorce process as well as determining what kind of funding you will need after the divorce. Going from a two-income household to one can be shocking, and you will need a lot of information to be prepared for the transition. It is a good idea to gather the following documents or statements:
- Checking and savings accounts
- Retirement accounts
- Investment accounts
- Ledgers for outstanding loans
- Recent pay stubs
- Credit card statements
- Income tax returns for the past three years
Having all of this information will allow you to examine where you stand financially, and it will be helpful to create a plan for the financial aspects of the divorce process as well.
4. Seek the Advice of an Experienced Family Law Attorney
Many people choose not to retain an attorney when they go through a divorce because they are worried about the cost. Do not make this mistake! An attorney may be an investment right now, but it often pays off in the long run.
You should speak with an attorney even if you are just thinking about possibly divorcing. An experienced Family Law counsel listens to your particular set of facts and will advise you on when and how you should proceed. A good attorney will tell you whether you are ready to start a divorce or what steps you need to take before you file. Your lawyer will also know if your circumstances require that you consult with a financial advisor before filing for divorce. The lawyer will have recommendations for financial advisors if you do not already have someone.
Our experienced Connecticut family law attorneys can help you financially plan for your divorce and/or help you to find the right professionals needed in the process. At McConnell Family Law Group, we can further educate you and your spouse and help you determine the right process for your particular needs. To schedule an appointment in one of our offices located throughout Connecticut, contact us at: (860) 266-1166; or (203) 344-7007; or by visiting www.mcconnellfamilylaw.com.