Submitted by: Deborah Moskovitch
The Finances of Divorce
A client came into my office the other day, in tears. She was just about to sign papers to purchase her new home, but was now feeling unsure of her decision. My client was in the middle of negotiating her financial agreement and wanted to prepare herself for the fresh start she desired when her divorce became final.
There is no crystal ball as to how this will end……
While you might have an idea of where you would like to see yourself financially post-divorce, this objective and the final outcome might not necessarily the same.
Mistakes to avoid during divorce
- Don’t make any significant investments before your settlement is signed
- Don’t make any significant purchases while negotiating your settlement – you might end up being responsible for that purchase, such as jewelry, vacation, clothing and so on.
- Don’t make purchases based on projections; you never know how it will turn out.
Establish your own financial identity
If you have been the financially uninformed spouse, and you do not have a credit rating, now is the time to start building one.
If you are in the matrimonial home and your spouse has left, you might want to consider changing the household bills to your name. Make sure you pay these off on time and in full. This is a good way to start establishing a good credit rating.
If you had a joint credit card with your former spouse, the principal card holder has the credit rating. Apply for your own credit card. If you are a first time card holder, you can always start out with a small credit limit and gradually increase it as you pay off on time and prove to be a good credit risk.
Get your finances in order before divorce
All lawyers agree on how important it is for their clients to be as financially aware as possible. It’s the best way to learn your rights and obligations and determine realistic expectations early in the divorce process. Your lawyer can then give you informed opinions based on fact, not on speculation. And the more you can manage and organize your information for your lawyer, and establish realistic financial goals, the more you can help reduce your lawyer’s billable hours!
- Get involved in your finances. Know the basics – pay the bills and file the statements. Learn how your daily and monthly expenses are managed.
- Determine where the money is coming from and how it is applied toward your budget.
- Take part in setting up investments such as retirement funds, and understand where and what the other assets are.
Many lawyers suggest that if someone is contemplating a divorce or separating, one of the first things they should do is accumulate the financial information.
Deborah Moskovitch is a divorce consultant and educator, and author of The Smart Divorce: Proven Strategies and Valuable Advice from 100 Top Divorce Lawyers, Financial Advisers, Counselors and Other Experts. Deborah has become an opinion leader in the media and has shared her insights and research on television and radio to explain that divorce can be managed in smarter ways. To learn more visit thesmartdivorce.com.