Divorce can be one of the toughest periods in a person’s life. To make it worse, from a financial standpoint the process can be even more devastating. Paying divorce fees, splitting assets, and constant negotiating comes with filing for divorce – but what should you do financially after you file for divorce? Here are seven steps to take to establish yourself and help you avoid paying unnecessary fees – or living above your means – during and after divorce.
Hopefully, the divorce is mutual and goes through smoothly, but using professionals from the beginning is advised in case of any disagreements. If a lawyer only comes into the equation midway through the procedure, it can turn into a “he said/she said” scenario, where there isn’t evidence to back up either person and the use of dispute resolution lawyers might be needed and costs eventually increase to an unnecessary amount. If your financial situation is complicated, consider using a financial professional who specializes in divorce issues as well.
During a divorce, documents can be an important asset to use as evidence and keep track of. Bank & credit card statements, tax returns, retirement accounts and appraisals for valuables are all vital to being completely up front. In some cases, spouses who intend on filing for divorce in the future try to funnel money out of the accounts for their own financial gain. Regardless of if your filing or they are, having a copy of all the documents protects you from any allegations during the procedure.
Pulling copies of credit reports should be reviewed, making sure you were aware of every loan in the history. If anything is flagged, you can use these reports to your advantage as you might not be liable to split any unknown debt.
This will help your long-term future; it will create a credit score for yourself rather than as a married couple. Doing it before the divorce is advised as your credit score will take a dip after the divorce. Having a good credit score can be really helpful if you're looking to buy a home, car or just need extra financial aid to get back on your feet.
Working out your personal income and outgoings will help you evaluate your ability to either help your spouse or if you’ll require aid from them. Don’t assume that your current outgoings will be split in half and that’s the new number; they might spend more money than you daily or prefer more luxuries, which are no longer your responsibility to contribute to. Hopefully, your standard of living will stay the same, but it's best to ensure everything is viable and affordable rather than making assumptions.
Buying a new home, car, or other big-ticket item without knowing how you're going to pay for it is not a good idea. Until the divorce is finalized, nothing is set in stone and you might be committing to a purchase you can't really afford and that isn’t viable in the near future – which could impact your finances in both the short and long term.
Reviewing your mortgage and account beneficiaries is an important step after the divorce, making sure that your personal assets are going to the right people rather than your ex-partner. If anything was to happen to you and the paperwork hasn’t been updated, even if the banks and lawyers are aware that they are now an ex, it’s likely that your assets will still move over to them. Also, updating your power of attorney, health insurance, and healthcare decisions forms will make any future decisions easier for your family.
Most issues you need to address during and after divorce aren’t pleasant – especially the financial issues. The process is a negative experience for most people, but for you to get through it, addressing your financial issues correctly and not rushing into anything is key. Using a divorce lawyer (and financial expert if your situation is complicated) from the beginning, asking your lawyer and financial pro to review and explain any settlement offers from your ex-spouse, and making smart, mature decisions are all key to securing your financial future post-divorce.
Richard Meadow is a writer who works on topics in relation to employment, probate solicitors, and divorce. He is always interested in new subjects and articles to read and enjoys writing about them. He has experienced some of the problems that can occur after divorce, and believes these are all areas to address to avoid complications.Back To Top
Certified Divorce Financial Analyst
Business Valuators / CPAs