No one enters into a marriage expecting it to end in divorce. However, the future is unpredictable; what may have been a great marriage may not last long. There are many grounds for divorce, the common ones being adultery, domestic violence, mental illness, and abandonment. Marriages may also end due to other reasons such as differing cultural and religious beliefs and viewpoints.
Currently, it is possible to file for no-fault divorce, which does not require one spouse to prove the fault of the other spouse. Instead, a couple may divorce even in the absence of a major conflict as long as one party seeks to end the marriage. When preparing for divorce, it would be wise to understand the various ways in which you can prepare. At the San Diego Divorce Attorney Law Firm, you can get answers to all your questions regarding divorce, including how to prepare your finances in anticipation of divorce.
Divorce is a tough process that may be draining emotionally and physically. At times, however, no amount of counseling or mediation may keep a couple together, leaving divorce as the only option. In the United States, for instance, 40 to 50 percent of first marriages end in divorce. The divorce rate is even higher for subsequent marriages. Studies reveal that 60% of all second marriages end in divorce while 73% of all third marriages end in divorce.
Why You Should Prepare for Divorce
Many people often feel guilty if they consider preparing for divorce. Financially preparing for divorce may be a sign that you have lost hope of reviving your marriage. No one would like to appear like the spouse who stayed too long in a failing marriage planning to get the best financial outcome after divorce. However, preparing your finances before divorce is a noble task as it helps avoid conflict and financial trauma that may occur after divorce.
How you prepare your finances before divorce depends on your home setting and the current financial roles you hold in the household. The way two people prepare for divorce may be different depending on their unique situations. For example, a stay at home mom's financial preparation for divorce may entail planning to rejoin the workforce and earn an income to support her household. If you are an extravagant spender, your financial preparation for divorce may entail saving up more income to avoid drowning in debt after divorce. Therefore, preparing for divorce is a positive step and not a selfish act as most people assume.
Taking time to prepare your finances before a divorce is beneficial to both parties. Planning your finances helps to minimize financial stress for both parties.
Preparing Your Finances Ahead of Divorce
Divorce can extremely mess your financial situation. When you are preparing your finances for divorce, you should consider the cost of the divorce as well and plan for it. How much does a divorce cost? According to research, there is a wide range of possible costs of divorce. The most expensive divorce in the world being up to $2.5 billion dollars.
According to studies, a divorce may cost as low as $500. For most couples, divorces cost between fifteen thousand dollars ($15,000) and twenty thousand dollars ($20,000). The cost of divorce has several components, including court fees, attorney fees, mediation costs, record deed fees if you and your spouse own the home, and refinancing fees for an owned home. The cost of a divorce depends on several factors, including the value of assets within the marriage and whether the divorce is contested or not.
The process of separating a couple's assets and money is complex. Divorce may include financial obligations such as a child or spousal support. Before these obligations appear, it is important to prepare your finances in advance. Each divorce case is unique, and the way one person prepares his/her finances for divorce may be very different from the way another person may prepare. However, some universal tips can help you get ready for divorce:
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Consolidate Financial Documentation
Financial documents reveal your marriage's financial situation. Consolidating financial details may be time-consuming and tedious; it is advisable to start gathering this information immediately you decide to get a divorce. The Institute for Divorce Financial Analysts recommends a checklist of the necessary financial documentation. For instance, if you operate joint accounts with your spouse, contact the financial institutions or financial advisors and get copies of the joint accounts' statements. Precisely, you may gather saving accounts and statements for the past year; investment accounts statements and statements associated with retirement schemes.
You may also collect the past investment accounts statements as they will serve as evidence of the investments you may have made as a couple. You should also gather documents that indicate any outstanding debt, including auto loans and mortgage loans. Do not leave out credit card statements. Documentation outlining all the assets brought into the marriage, and all the assets acquired together in marriage is crucial.
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Understand Your Current Financial Situation
When preparing your finances before a divorce, you should find out what you own as well as what you owe as a person or jointly as a couple. If you do not understand the present assets and the outstanding obligations, you cannot negotiate for your fair financial share during the divorce proceedings. You may consider obtaining a personal credit report that outlines your debts or the debts your partner may have taken in your name, and you are not aware of it. If you unearth any suspicious information, you should share it with your divorce attorney and not your partner.
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Anticipate Future Expenses and Track Current Expenses
Immediately you learn that divorce is the only option, keep track of all your household income and expenses. By tracking your income and expenses, you can easily create a budget post-divorce. A record of your income and expenses will also help your divorce attorney and the judge in deciding how to allocate assets and debts during the divorce proceedings. The record may also come in handy when the court is making decisions regarding the child and spousal support.
While tracking your income and expenses, you should include items such as household bills, home maintenance, transportation costs, clothing, food, childcare, entertainment, and any other expenses on which you may spend money. Your credit card and bank statements may help you track your expenses for the past years. Do not focus on normal day-to-day or monthly expenses alone. Instead, consider one-time expenses such as fixing a faulty laundry machine.
In addition to considering your past expenses, you should project future expenses. When predicting the future, you may use your past expenses as a reference point; however, remember that things change. For example, if you have small children, your expenses may revolve around childcare. In the future, however, your children may pose additional financial obligations, including college tuition and after-school activities.
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Anticipate Resistance
Divorce may turn even a seemingly cordial spouse into an enemy. While some couples may freely exchange financial information in the face of divorce, some spouses may be adamant about sharing related financial information. Some spouses may only release financial information if they are legally ordered to do so. This is most likely to happen if one spouse is the sole controller of the household finances. If you gather all the required financial information before filing for divorce, you may reduce the charges of a confrontation with your spouse.
If your spouse is persistent and constantly fights you and halts your efforts of gathering financial documentation, you may seek the assistance of a divorce attorney. An attorney may recommend court-ordered options.
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Avoid Big Financial Decisions
When anticipating a divorce, you may consider it wise to make some financial adjustments, including changing your next of kin and other financial beneficiaries. However, it is advisable to wait until divorce proceedings commence before making such adjustments. During the legal divorce proceedings, an adjustment relating to wills, retirement schemes, and beneficiaries are made. Making these major financial adjustments before the divorce proceedings may give your spouse an advantage as the court may reward him/her over you. You may also attract criminal contempt charges for making such changes ahead of time. Always consult with your divorce attorney before making any significant financial move. For example, before you remove your spouse as a beneficiary from your insurance policy, for instance, seek the legal counsel of a divorce attorney.
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Open a Credit Card in Your Name
Once you opt to get a divorce, it is wise to avoid accumulating debt jointly with your spouse. For instance, if you were previously using a shared credit card, it may be time to get a credit card in your name. This step will help you begin the journey of separating yourself from your ex-spouse financially. Often after divorces, joint accounts are closed, and each spouse uses individual accounts. Therefore, the sooner you separate yourself from jointly operated accounts or credit cards, the better. You may also open a separate account in line with your financial separation from your soon-to-be ex-spouse.
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Check Your Spending and Saving
It is tricky to separate joint finances, and the procedures followed depend on state laws. If you are anticipating a divorce, you may be tempted to spend too much of your joint savings, for instance. Spending may have some detrimental consequences, especially if the court decides to treat your income and savings as a common pool during the divorce process. Having spent too much from the common pool will put you at a disadvantage.
It is advisable to continue using your personal and joint accounts as usual, even as you plan for divorce. If you lack money to cover expenses such as divorce attorney fees and other costs, you may reason with your soon to be ex-spouse and agree on how to spend. By agreeing, each of you will spend a comparable and conservative amount. However, if your relationship is already rocky and you cannot come to a spending agreement, you may seek help from your divorce attorney who may recommend a legal separation ahead of the divorce. A legal separation sets clear how both you and your spouse may spend money until the divorce proceedings are finalized.
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Be Flexible
When you are preparing your finances before a divorce, you should be open-minded and ready to sacrifice. For instance, understand that you may not be able to afford the standard of living you have always had. Knowing this will help you to plan for your income accordingly. In a divorce proceeding, you may not come out with everything you hope to keep. Therefore, be flexible, choose your battles wisely, and focus on what is most important. Even if your financial position may change after divorce, the good thing is that you will not be starting from scratch. Instead, you will have some assets allocated to you, and you will only be starting afresh.
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Consider Working Together
The best way to protect your finances in the face of a divorce is by cooperating with your spouse. Your divorce process may cost much lower as long as you agree with your spouse. Agreeing with your spouse can help improve your financial situation as well as the financial situation of your spouse. A contested divorce is always more expensive than a divorce with cooperative partners. Partners may cooperate and opt to settle the divorce through arbitration or mediation. These divorce processes would be more affordable than going through the litigation process.
Get Help on Divorce Issues Near Me
Whether a divorce process seems friendly or stormy, a divorce attorney can smoothly guide you through the separation. The components of divorce are too weighty to be handled in the absence of a divorce attorney. Especially if your spouse is the financial manager in the house, you may need to seek financial assistance on top of legal assistance. The financial technicalities of a divorce may be harder than you may anticipate. At the San Diego Divorce Attorney, our divorce attorneys can offer all the legal assistance you need. Contact our San Diego divorce lawyer at 858-529-5150 and speak to one of our attorneys. Seek legal assistance before you file for divorce to have an attorney guide you through the preparation to the execution of the divorce.
