Divorce & Finances: What Women Need to Know

By on February 16, 2017
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People typically don’t get married thinking one day they will be divorced, but just about 50% of all marriages in the United States end in divorce. If you do find yourself amongst the 50% of Americans going through divorce, know there are things you can do to put yourself in a good position. Here are a few simple things you can do to be prepared.

Gather Important Financial Documents

If you handle your own finances, gathering your financial information will be easy for you. If your spouse has taken care of the finances during your marriage, it may require some extra time and effort to get your hands on these documents. Here is a list of documents you may need:

  • Income information, including check stubs and documentation from investment and rental property, dividends, interest, gifts, etc.
  • Employment Records showing evidence of wages, salaries, bonuses, commissions, raises, promotions, expense accounts, and other benefits or deductions.
  • Bank information, including bank statements, balance sheets, and charge account statements on personal and business accounts, if applicable. Also include statements from brokerage accounts such as certificates of deposit, money market accounts, mutual funds, and retirement accounts.
  • Outstanding debts, including all debts owed to you, owed by you, or cosigned to you, such as mortgages, personal loans, credit card statements, promissory notes, and pending lawsuits.
  • Income tax returns, including personal (federal, state, and local) and business. Include any supporting documentation, such as W-2s and 1099s, and your completed tax returns for the past two years.
  • Property Tax Returns, including all returns since the beginning of your marriage.
  • Financial statements and loan applications prepared by you or your spouse, and submitted to banks or lending institutions during the past five years.
  • Pension, Profit Sharing, and Employee Stock Option Plans, or any other plan you or your spouse have participated in during the course of your marriage.
  • Estate planning documents, including wills, trusts, and Powers of Attorney for yourself and your spouse. Additionally, include any documents for which you are beneficiary, trustee, executor, or guardian.
  • Insurance documents, including life insurance policies for you and your spouse, and statements of their cash values. Also include other general insurance policies such as health, disability, casualty, motor vehicles, property, and liability.
  • Property documents, including deeds, purchase agreements, mortgages, notes, tax statements, rental/lease agreements, appraisals, and expenses associated with each property. Include information about properties owned prior to your marriage as well as property acquired during the marriage.
  • Sale and option agreements on real estate owned by you individually or jointly with your spouse.
  • Personal property, including invoices, contracts, and appraisals on items such as furniture, jewelry, artwork, equipment, antiques, and collections.
  • Motor vehicles including financing agreements and titles to all vehicles owned by you, individually or jointly, at any time during the last five years, including automobiles, boats, or any other types of motor vehicles.
  • Membership cards or documents identifying participation rights in country clubs, health clubs/spas, private clubs, associations, or fraternal organizations during the past five years of the marriage.
  • Business documents, including records, ledgers, net worth statements, account statements, corporate interest certificates, agreements and contracts.

Check with your lawyer to see if there are additional documents you may need. Get your hands on these documents as soon as possible to avoid possible unpleasantness trying to obtain them later.

Check Your Credit

If you, or you and your children, are going to be on your own for a while, you want to ensure your credit is in good standing. You are entitled to a free copy of your credit report each year. Get to know your credit score, and what’s on your report, correct any information that may be wrong; it can help boost a suffering score. It can be nearly impossible to get loans and lines of credit with a bad credit score.

Additionally, if you and your spouse had joint credit cards, ask for the cards back and remove him from the account, or close the account and open a new one in your name only. Keep a close eye on credit card statements to ensure there is no unauthorized use. As long as both names are on the account, you can get stuck paying for purchases you did not make.

Be careful when closing credit accounts; it can negatively affect your credit score. However, you may have little choice when getting divorced. As long as the account is open, the creditor will consider you both fully responsible for charges. Read our tips on how to Close a Credit Card Account Without Killing your Credit Score.

Open New Accounts in Your Name

If you and your spouse hold joint financial accounts, it’s time to set up accounts in your own name. If possible, use a different financial institution than where your current accounts reside.

You may also need to open your own credit accounts, which may or may not be a problem for you. The Credit Card Accountability, Responsibility and Disclosure (CARD) Act was passed in 2009 to protect consumers from getting into serious financial trouble by accumulating credit card debt they could not afford to pay. This made it difficult for stay-at-home moms to obtain credit. The CARD Act has since been amended to allow non-working spouses to apply for credit in their own names based on shared household income.

This may still be a problem for some whose shared household income doesn’t meet creditors’ criteria for safe lending. The best thing you can do is call and ask about the criteria, and take actions to position yourself in the best way possible so that you can obtain a line of credit.

Get Help!

You have a lot at stake, and you want to protect your family and your assets, but you may not be thinking clearly because this is, after all, a difficult, emotional time. The first thing you should do is contact a lawyer. A good lawyer will help prepare you and help you navigate all the legal details of divorce. If you think you can’t afford a good lawyer, there are ways you can Minimize Legal Fees While Getting the Help You Need. However, remember that legal mistakes can be just as costly as retaining a qualified lawyer.

Depending on your financial situation, you may also want to consult a financial planner. Financial portfolios can be extremely complex to handle due to various regulations. It’s in your best interest to talk to a qualified financial professional who can help you protect your assets.

Neither your lawyer nor financial professional can prepare you for the onslaught of emotions you will experience during this time, even if you feel like you can’t wait to get out of the marriage. Consider visiting a qualified therapist to help you keep your head straight while going through divorce. It’s imperative you are able to think clearly and make good decisions for you and your family.

At a time like this, it’s normal to feel like you just want to be done with the situation. The more prepared you are, the faster you can get through this ordeal. Remember to get your finances in order and enlist the professional help you need to protect yourself, your family, and all the things you worked hard to achieve.

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About Harold Goldman

I am the founder of FinancialSafetyNet.org, and a Retirement Planning and Long-Term Care specialist. I am also the President of Emes Insurance Services, Inc., a Murrieta based insurance agency designed to help people with Retirement Planning and funding for College. I believe in educating my clients to become financially competent in an effort to develop plans for guaranteed income, protection against loss and tax-advantaged growth. To contact me Call (844)-376-2265

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