Divorce can be an emotional decision, but many of the details of ending a marriage involve financial matters, and in order to be well-positioned to make smart financial choices, a person considering divorce needs the right information.
Too often, one spouse will lack full access to or knowledge of all the financial data – what assets do they own together? What credit cards are in each other’s names? Who has the savings and investment accounts and where?
The first step to prepare financially for divorce is to do a full accounting of the marital estate. You will need to gather updated statements on all banking accounts (checking and savings), as well as any retirement accounts held in the name of either spouse. You will need to know your assets – their ownership status, appraised value, and debt owed. You will need a full list of debt in your name and your spouse’s name, whether a credit card or a loan.
If you are uncertain about the spending habits of the other spouse, you can find that information quickly by procuring a credit report for you and your spouse. The credit report will list all of the open accounts in your name or your spouse’s name, or any joint accounts, and will give you the ability to see if a spouse ran up unusual spending on any account or secured credit without your knowledge.
You will want the tax returns that you and your spouse filed in the last three years. The tax returns may also give you information about benefits from employment you did not realize existed for your spouse.
Once you have a full accounting of the marital estate, you need to identify the income stream for you and the income stream of your spouse. If you think your income will be insufficient to support yourself alone, you will need to consider if your spouse earns sufficient income to assist you through the payment of spousal support or maintenance. Wanting spousal support is different than a court finding you should receive spousal support, and you need to prepare for both outcomes.
If you do a budget based on necessities alone, you will determine fixed costs that you must cover every month and how your income manages to meet these demands or not. You may need to reduce certain costs or you may need to seek payment of those costs from your spouse.
Looking longer-term post-divorce, you need a good sense of what you could earn and budget yourself accordingly. If you want to maintain your current lifestyle, you have to see if you can do that without spousal support or with it, and if it will be ordered (you will need to discuss this with your attorney). You may find that you have to make choices about short-term lifestyle versus long-term financial stability. It may be wise to consult a financial advisor about different options.
With all of this information in order, you will be much better prepared to discuss the dissolution of your marriage with your prospective attorney.
If you have questions about financial considerations and divorce, contact us – we can help.