Tag Archive for: finances

Post Divorce Finances – Wrapping Up, Moving Forward

After your divorce you will have a new life to build. This may include finding a new place to live, transition your children to their new lives between homes, and becoming accustomed to your new home. While your emotions may be running high and you are excited about your future you need to be vigilant in establishing your own credit and gaining financial strength.

1) Know your credit score. Checking your credit score will give you a benchmark of your current financial state of affairs. Your numerical score will show you if you have work to do to increase your attractiveness to lenders. As you go out and apply for credit – a car loan, mortgage or even find an apartment to lease your credit score will be checked. Poor credit can significantly limit your ability to borrow money. In addition to knowing your credit score your credit report will also display accounts are open in your name as well as any derogatory information that might not belong to you so you can work on repairing it.

2) Close joint accounts.

You and your spouse probably had many joint accounts open such as checking and savings, investments and even debt (credit cards and lines of credit). Dividing these accounts will be handled during the divorce process but it is important to make sure that they are closed. If they are left open both parties have the ability to still use them and accrue debt in your name, which could be problematic for your credit.

3)  Open your own credit

You will need to establish your own credit as soon as possible. This can be as simple as low-limit credit card. Charge items and services to this account and make payments every single month. This should have a positive impact on your credit and demonstrate your ability to pay your bills.

4) Create a budget and stick to it

Living on one income can be difficult so it will be important to know how much you are spending. Establishing a budget will help you track your expenses and ensure you do not go over budget. Have a plan to pay down debt, put a bit of money into an emergency savings account and also some money for entertainment if you can afford it. Being responsible now will lead to great rewards for you in the future.

5) Pay down debt
While you may want to put money away into your savings account it is wise to pay down your debt as quickly as possible. There are many options to do this and you can find a plan that is right for you. Try to send in a little more than your monthly payments each month and also cover the cost of interest charges.

Stepping out on your own financially can be an overwhelming experience. We help you set-up your financial future and as you step into the preparation it is important to move wisely to protect yourself. Put professionals around you for guidance and always keep your eye on establishing security for yourself. Most importantly, make wise and prudent decisions to build yourself the security that you need.

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The finances of your divorce – Three Important Parts

During your divorce every nook and cranny of your financial picture will be evaluated. Together we will take a look at the finances you brought into your marriage and then what you and your spouse accumulated together. It is very important that you have a full understanding of your financial picture and copies of all financial documents.

What did you bring into the marriage?

Before you got married you may have had assets including investments, property and savings account. If you kept them solely in your name and they did not increase due to the influence of your spouse, they are yours to keep. If you commingled these assets with your spouse, meaning you added his/her name as an owner, then they are considered a contribution to the marriage and the court will determine how to allocate them. Some counties will apply their own methodology for determining what portion you will get credit back for this contribution based on the date it was contributed and time that has passed. The increase in value of a separate asset is always marital. Usually we look at each asset on a case by case basis. It is important that you provide your attorney with the details of any contributions you made either from before the marriage or through an inheritance and it is also important to have a paper trail of these transactions.

What assets did you build together?

The assets of a marriage are simple to state but can be difficult to calculate. For instance, if you had a 401k before your marriage but continued to then add to it during your marriage, your spouse is entitled to share in the accumulation since the date of your wedding. If you and your spouse purchased a home together the current equity is up for consideration.

Make copies of your statements

A very important part of your financial situation is knowing your current financial situation. When you decide to divorce (or find out you are getting divorced) start to immediately make copies of financial statements. Do not let your spouse try to hide money or claim

Just as every couple is different so is every divorce. You have the ability to negotiate each part of your divorce to ensure you are getting your share of the assets. Additionally, based on other factors such as income and potential income we can always negotiate in other ways as well – trade-offs are common. An experienced divorce attorney will be able to explain your options and negotiate creative solutions for you.

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Practical Steps in Preparing for Divorce

Many clients contemplating divorce have questions about what they should do even prior to filing for divorce to protect themselves. Below is a list of some proposed actions from personal finance company, Kiplinger’s.

Obtain a credit card in your own name if you don’t already have one.

Obtain a checking and savings account in your own name.

Withdraw half the money in joint accounts or change the signature authority so that both parties must sign to complete any transaction. (Beware that if you withdraw all the money in a joint account you may be ordered to give back a portion by the court down the road and accordingly, it is not wise to spend it.)

Collect all information accessible to you regarding your spouse’s bank accounts, retirement/pension plans, insurance policies, real estate interests, and any other financial assets.

Get copies of state and federal income tax returns for the past few years.

The purpose of these actions is to preserve your financial stability going forward by putting things into your own name. You are also ensuring that joint accounts will not be used or closed out by the other party without receiving your fair share. Ultimately, the court will determine what that fair share is at the time the divorce is finalized and that is why the money should not be spent pending the finalization of the divorce. Another tip for parties who are selling a marital home either prior to filing divorce or while the divorce is pending, is to hold the proceeds of the sale of the home in escrow. The share of the proceeds payable to each party would then be determined at the time of equitable distribution.

Click here to view the Kiplinger’s Article: Divorce and Your Money

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