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Steps to Financially Prepare for a Divorce

Steps to Financially Prepare for a Divorce

| February 14, 2020
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So, you've realized it is time to move on.  What do you do next to protect yourself financially as you go through the life-changing process of a divorce?

  1. Get copies of all your financial documents.  At a minimum this will include:
    1. At least two years tax returns
    2. Checking and savings account statements
    3. Brokerage account statements
    4. Retirement plan statements
    5. Mortgage statements
    6. Any other loan statements like credit card or auto
    7. Credit report (a good source is annualcreditreport.com)
    8. Pension statements
    9. Social Security statements (available at ssa.gov)

You may choose to keep copies somewhere outside of your home.  Good options are your office, a safe deposit box in your own name, or with a trusted friend or family member.

 2. Decide which type of legal representation is best for you. Independent legal counsel is the first thing that comes to mind for most.  An individual attorney may be best suited for a divorce that may be contentious and will often end up with higher legal fees.  Many family law attorneys bill on an hourly basis.  Some, however, will charge a flat fee for your divorce so you will know going in what you will pay.  Another consideration is mediation or collaborative law which will result in a more peaceful process if you and your soon-to-be Ex are willing to work together.  Those two types of representation can also assist in keeping your relationship with your Ex friendlier for longer.  Keep in mind that whatever you and your spouse can agree to on your own will save you billable hours.  There is a real financial benefit to cooperation.  If your spouse is willing, the two of you can both save time and money by using mediation or collaborative law to get to an amenable end.  It’s important to work from a team approach which puts your family first at this challenging time.

  1. Take your time. We frequently work with people who just want the whole thing to be over and make concessions they don’t need to make.  It’s important to make sure you understand the financial impacts the divorce will have; not just now, but in the future.  Working with a financial advisor with a CFP® mark or CDFA® designation can help you visualize how various settlement options will affect you over time.

Your attorney is great at the law portion of the process but may not be focused on what your whole financial life looks like at the time of the divorce.  It makes sense to consult with a financial planner before it's final.  Our team can help you build a new post-divorce spending plan, prioritize your new financial goals and help you start your new life on sound financial footing. 

 

This is meant for educational purposes only.  It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions.  02/20

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