If you find yourself seriously contemplating ending your marriage, you should take certain steps before even meeting with an attorney. Those steps concern financial security – both short term and long term.
Every marriage, while unique in its own way, from a financial standpoint involves either (a) two equal wage earners, (b) two wage earners with one earning significantly more than the other, or (c) one principal wage earner on whom the other depends. In scenario (a), it may seem like divorce will not be hard financially, while in scenario (c), the dependent spouse will be in real need. However, it is possible that the opposite could be true: living together as one household for two wage earners just barely worked, but now apart they cannot afford their standard of living, and that dependent spouse may have an inheritance waiting.
So, if you find yourself ready emotionally for divorce, you need to make sure you are also ready financially. To do that, you need to get yourself some paper, a pencil and as many of your records as you can locate.
First, what are your assets? You need to identify all property you own separately or with your spouse, and the value of each asset. You also need the right documents for each asset – titles, bank statements and the like.
Second, what are your debts? You need to identify every loan, mortgage, credit card balance and other debts, and whose name is attached to that debt.
Third, what is your current and potential income? These are not necessarily the same. Some people may not be working because they stay at home to care for the kids, or find themselves between jobs, but the courts (and circumstance) may require you to work again, or work more. In order to determine short and long term budgets, you first need to see what your reasonable income will be.
Fourth, what are your current expenses? Divorce involves a two-step process in terms of expense – separation, where the goal is maintaining the status quo, and post-divorce, where the goal is independent living by each spouse. Often when a spouse seeks a divorce, that spouse only focuses on the short term costs, when the really important set of expenses will be fixed minimums amounts for life after divorce. What is the minimum sum you require to meet the barest essentials? How much can you afford beyond that amount?
Finally, complete your budget and have a financial plan that assures you do more than accrue lots of debt – focus on smart financial choices that give you the ability to save for your future or, at worst, live within your means for the indefinite future.
If you have questions about financial considerations and divorce, contact us – we can help.