Money is one of the most common causes of divorce. Some studies show it as the number one cause. When a couple has different values regarding money, or when one or both partners make poor choices with their money, serious marital stress results, and this stress can flow into the divorce process and continue to be a problem after divorce.
Not surprisingly, most couples who divorce over money issues do not keep a budget. When there is no clear understanding of how much money is coming in and where it is going, there will be more disagreements. Overspending and credit card debt are major issues in divorce, often because one spouse spends more than the other. This is because the partners have different views about money.
This often leads to “financial infidelity” – keeping secrets from the other partner about how money was spent or on what, which naturally causes arguments and resentment when the secrets are discovered.
Financial infidelity is much more common when couples keep separate finances. Couples who keep joint finances are less likely to divorce over money and are also less likely to experience financial cheating. Couples with separate finances often know little about each other’s financial choices, often not even knowing their partner’s salary.
Spouses might keep separate accounts so they can have control over their “own” money. If they have different views about the use of money, a spouse might keep a separate account just to keep the other partner from “wasting” his or her “own” money. The problem with this view is that in marriage and in divorce, money is communal. It affects the whole household and is meant to support the whole household. Thus, hiding financial information from a spouse can cause serious distrust and strain on the relationship.
If you fought about money while you were married, this will certainly spill into the divorce. That is why it is so important to have a divorce lawyer act as an experienced third party who can help you navigate the difficult waters of divorce.
During a divorce, you will be dividing your property and assets as well as your debts. The first thing to do is to cancel all joint credit card accounts and open separate ones. The debt on those closed accounts will become part of the divorce process, but by canceling joint accounts you can avoid any future debt that your spouse incurs being applied to you.
If financial infidelity has happened during marriage, expect that it will continue. Sometimes a spouse tries to spend money in order to draw down the joint assets (this is called dissipation). An experienced divorce lawyer will be able to recognize this. You may also need to contract the services of a forensic accountant who is an expert in going through finances and finding fraud or hidden money. Your lawyer should be able to recommend someone.
Tax changes, pension and retirement plan issues, life insurance, and costs of ongoing child support will all be important issues to discuss with your lawyer.
If you did not do it during the divorce, as soon as possible afterward change your beneficiary information. Also make sure you close other joint accounts, like iTunes, streaming services, frequent flyers, etc. This article lists some other common steps to take.
If your money habits and attitudes contributed to the divorce, you may need to examine them. Recognize any bad habits in the use of money that need to change, and create a budget. Refrain from major purchases for some time after divorce. This gives you time to judge the situation and make decisions that are not emotionally charged. This also includes avoiding spending sprees.
When money issues fuel a divorce, it is important to obtain expert guidance so you avoid making decisions that will negatively impact you and your children in the future. Talk to one of our experts to see what we can do to help you through your divorce.