Divorce finances can be complicated. Whether you are thinking about getting a divorce, currently in the process, or have already parted ways with your spouse, setting your finances in order is extremely critical. Here’s everything you need to know.
Here’s What You Need to Know About Divorce Finances
Assess Your Financial Heath
You can expect your credit score and income to drop after a divorce. You will pay at least $8,500 to $100,000 during the dissolution in legal, real estate. and mental health expenses.
If you are just thinking about getting a divorce or starting proceedings, now is the time to prepare your financials. In many relationships one spouse controls the finances, which tends to leave the other in the dark. At this point it is critical that you investigate your financial situation. Make copies of your tax returns and bank statements.
I would also suggest you speak with a Certified Divorce Financial Analyst, which is a specialist who offers an array of services to assist you in gathering your financial portfolio. Include financial statements, tax returns, pay stubs, employee benefit and retirement information, list of assets and debts, credit card statements, insurance information, mortgage statements, and other documentation.
Open a bank account and apply for a credit card in your name if you do not have one already. Start contributing money into your new account. Remember, community property states may consider this to be a marital asset. Community property states encourage couples to split any assets and debt acquired during marriage. When opening your credit card, do not authorize your spouse as a user. This will help you start building your own credit.
If you are wondering if you should keep the house, sell it, or move on, knowing your spending power is critical. I recommend that you Speak with a Certified Divorce Lending Professional (CDLP). CDLPs are trained in divorce finances and are considered to be divorce mortgage planners. They work with divorce attorneys and other divorce professionals. Together, they put their focus on divorcing homeowners, guiding them to make more informed decisions regarding their home equity and identifying any potential conflicts between the divorce settlement, the mortgage, and the real property.
Asses the Marital Home’s Value
Hire a real estate professional to do a Comparative Market Analysis (CMA). I recommend a real estate professional certified in divorce, or a Certified Divorce Specialist (CDS). Through rigorous training they earn certifications enabling them to better provide support and services during the sale process. A trained CDS professional works with divorce attorneys and other divorce professionals. They develop a greater understanding of the legal, financial, and real estate issues of the divorcing couple.
If you decide to change your name after a divorce, remember to change your documents and accounts. This can include your employer, social security, DMV, property title, mortgages, and more.
Refrain from Making any Big Financial Decisions
This would include things like life insurance beneficiaries, obtaining a new mortgage, retirement accounts, and the like. Always speak with your attorney or divorce financial analyst prior to making any changes. Don’t dip into the joint accounts too much. Only take what is necessary.
Developing a plan to handle your divorce finances and financial stability is key. Initially, you may need to cut back on spending or downsize your property. However, the plan you develop with the help of professionals should set you up for the future.