15 Financial Divorce Tips [That Can Save You Thousands]
Going through a divorce is never fun or easy. As a matter of fact, it can be very time-consuming and stressful. In our 50+ years of family law practice, we are familiar with the divorce process and our experience has helped us earn our clients a speedy and favorable divorce agreement.
We understand how important money is and the security it provides to individuals after divorce proceedings. With this in mind, we put together our top 15 tips that can earn and save you thousands of dollars. These tips are easy to follow and will help alleviate some of the stress of your divorce. It also will help ensure you have the security you need after your divorce.
Just looking for the highlights and don’t have time to read all 15 tips? Check out our Top 5 Financial Divorce Tips.
1.) Cancel Any Joint Banking Accounts
After the divorce is finalized, it is important to cancel any account that has both of your names on the bank account. Everything that is agreed upon during your divorce proceeds will be protected by law but if bank accounts are left with both names on the account you will not be protected.
It is smart for both parties involved to cancel all accounts that are shared. Simply going into the bank and removing the name from the account can still leave you vulnerable. It is easier to start a new account with your name on it only to guarantee to protect your assets.
2.) Open Separate Accounts
As we discussed before, any account that you shared should be closed and a new one opened up in only your name. It is important to go through your purse or wallet and look at credit cards, bank cards, and even cards like frequent shopper cards.
While this may sound tedious and time-consuming, it is frustrating to find out your ex has used all your hard-earned grocery points or frequent flyer miles. Here is a simple rule: if you filled out a form and both your names were put on it, then you should cancel the account and start fresh.
Next, make sure any bill you might have such as utility, car, or internet services are separated into the correct person(s) individual name. If you do not verify your name has been removed from all bills, it can be a horrible surprise to find out later you on the line for anything unpaid.
3.) Record Income and Expenses
During a divorce, it can feel like your in a whirlwind and it becomes hard to keep track of everything. It is important to use a financial app, spreadsheet, or your preferred way to keep track of money.
You should keep track of all expenses when it comes to dependants, medical bills, expenditures for the divorce filings, and much more. Keeping details of all your expenses can save you money when it comes time for arbitration and settlement. It is also important to document all child support to ensure your settlement is being adhered to. If you have any questions, our child support lawyers are available for consults.
It is also very important to keep the future in mind as well. Tracking monthly expenses is straightforward, but think about expenses that will happen down the road. Is a major appliance old and in need of replacing? Is the roof to a house in need of repair? Do you have a family vacation planned or scheduled? All of these expenses can and should be included in primary divorce talks.
4.) Create an Individual Budget
This will be the first time you will be on your own since being married. Setting a budget based on your income alone and expenditures is extremely important. Having one income compared to two will take some getting used to, but a budget can ease your mind and prepare you for your financial future.
5.) Get An Individualized Health Care Plan
Most married couples have a joint health care plan. You will want to cancel that plan and figure out an individual or family plan (with your depends and not your ex) that works best for you.
A divorce is considered a life-altering event by most health care providers so you should be able to sign up for a new health care plan through your work if they offer one. If not, the healthcare marketplace will allow you to start a new plan with no penalty after a divorce.
6.) Update Your Will
During the divorce settlement, things like dependants and shared assets will have a plan in place if one of the people in the divorce dies. That still leaves a lot of other things to consider in your will and it will need to be updated.
Making sure any new income and assets go to the correct place upon death is important. If there are kids involved in a divorce it is also important to give specific details on how the assets you are giving your kids can be used.
7.) Contact Credit Score Institutions
Credit institutions are not going to be able to do anything about debt or derogatory marks earned during your marriage. However, it is very important to let the credit score companies know you are no longer married. This will help protect you even further from anything your ex could do to possible damage your credit score.
8.) Update Retirement and Beneficiary Accounts
Most couples, when married, will have filled out their benefits and retirement accounts to include their spouse. Unless you still want your benefits and retirement program to include your ex, it is wise to take them off your accounts.
Along these lines as well you should take the time to update any work-related forms. These can include, but are not limited to: emergency contact forms, benefits, health care, insurance policies, company life insurance, and others.
9.) Set Up A Separate Savings Account
We got this tip from a financial advisor we often recommend to our clients. Setting up a savings account in your name is one of the first steps for financial freedom from your ex.
During a divorce hearing, your lawyers can argue that putting a certain amount of money into saving is necessary for future financial stability. That means that the sum of money agreed upon for savings is included in all financial formula equations when settling on an agreement.
10.) Develop A Checklist And Take It Slow
This is probably one of the most important steps during, and after your divorce, to secure financial security. There is a ton to do not just financially, but throughout the divorce. Setting up a checklist allows you to see progress, keep track of tasks, and give you a sense of accomplishment.
Your checklist needs to include realistic due dates to keep you on track. Having due dates will also prioritize your actions on what is most urgent. Your checklist should keep you grounded during an otherwise rollercoaster time. For some of the best personal planning apps, you should check out this article here by Paste Magazine.
11.) Calculate Your Worth
This is a big step in your divorce and it is very important to take the time and truly evaluate your worth. The obvious items you should look into is your salary, assets in your name only, and value brought amongst dependents and household.
If you are a stay at home parent remember to log your time spent maintaining the household, cleaning, and time spent with dependants. All that time is valuable and can be considered when evaluating your net worth.
12.) Make A List of Assets and Liabilities
After you have calculated your worth you should look into shared assets and liabilities. Shared assets can include cars, houses, bank accounts, 401k, and much more. While going through the divorce process, is very important to think of not only shared assets but also individual assets that were earned during the marriage.
Even if your ex-spouse’s banking accounts, retirement plans, or assets are only in their name when they were purchased, if they have earned or grown during the marriage they can be included in the settlement.
Remember the more you can put down and add, the more there is to negotiate with. For example, even if you don’t want your spouse’s car you can list it as an asset and use it to get something you want. Let them take the car but you get to keep your 401k.
Also, do not forget to list out all your liabilities in the marriage. Liabilities can include mortgage payments, household bills, dependent care, credit card debt, and much more. Having an accurate list of liabilities can protect you during your divorce hearing and properly divide the assets with liabilities.
13.) Refrain From Major Purchases
This might seem like a no brainer but divorce is stressful and often times something shiny will come along that you want. Making a large purchase sends the wrong message to litigators and judges and might still be listed in your assets. A good rule of thumb is to wait till after all the proceedings are over and then ask your divorce attorney if the purchase is safe to make.
14.) Hire The Right Lawyer
Finding the right divorce lawyer is imperative. Knowing and understanding the types of divorces there are in your state and which divorce is the most likely outcome will help you find the right attorney for you. If your divorce is going to be a contested divorce, find a lawyer with your specific needs with litigation or arbitration.
A recent study found that during a divorce the person with the more experienced lawyer ends up getting 15%-25% more than those on the other side. The right lawyer can make a huge difference in not only your financial agreement but also in how child custody is awarded. If you’re in need of a child custody lawyer, we are available to help.
15.) Plan For The Future
A huge missed step by many going through a divorce is planning for the future. A lot of people going through a divorce have no problem identifying short term investments, liabilities, and expenses but do not plan for the future.
It is important to think of any bonds maturing, CDs becoming available, and when mortgages and cars might be paid off. Of course, also think of all the expenditures and costs that might be involved in the future.
When will the dependents be going off to college? How old are the cars? Are they going to need to be replaced soon? Is the house in need of repairs down the road? Ask yourself not only how things will look in 1-2 years but also in 5-10 years.
While you can always go back to the courts and litigation hearings to work on a new divorce agreement, getting it right the first time will save you money and time down the road. Try to think of anything financially that might change in 5-10 years and be sure to bring that to the table during your divorce.
We’re Here for You
We hope these tips help you work your way through your divorce a little easier. Remember, finding the right help is a big step in the right direction. If you need help choosing the right lawyer for your divorce, check out our full guide: How To Choose A Divorce Lawyer: The Ultimate Guide.
These money-saving tips we provided will not only help your lawyer but will ensure you get the agreement you are looking for. If you think we left something out or if you have any questions, feel free to leave us a comment below and we will gladly offer our help on any of your needs.