21 Dec Divorce and Your Money: A Thoughtful Action Plan
Those in the Divorce business will tell you that they experience an uptick in January. No couple wants to disrupt their family’s holiday, so they push the Divorce off until January. They know that it will be emotional and disruptive, even as they try to minimize the effect on their families.
Here are some thoughts on money matters while preparing for your Divorce
The economic realities
The process of itemizing your property and getting an idea of what will be left after you split it up is routine practice in all 50 states. Some people actually decide to reconcile once they see their financial landscape divided in half. Others use this as a reality check and move forward.
Know that your financial circumstances may change
Certified financial planner Lauren Klein has seen clients make poor decisions such as using retirement funds to help them keep the family home, only to see the house lose value and become an enormous financial burden. Many others overcommit in order to keep the home. They end up with a mortgage that could choke a horse, in a neighborhood that’s beyond their means, with a lavish landscape and gardener. They’d be much better off selling that home, taking the money and buying a smaller home in a modest neighborhood that they can afford.
Waiting too long to separate finances
Do not wait to split joint bank and any other accounts that you share. Change your login information and whatever else you need to do to separate your financial lives. Check your credit report periodically to make sure there aren’t any surprises. Remember that your ex has your social security number and knows your mother’s maiden name. One of my colleagues’ divorced husband died and she inherited nearly $750K of his debt—all of it from accounts that he had not canceled or transferred into his name.
Avoid big ticket, emotional buying
Don’t make any major financial decisions until the divorce is final. Most families deal with varying degrees of financial adjustment as they figure out how to support two households rather than just one. Avoid impulsive purchases until the dust settles.
Do not try to hide money or assets
If you try hiding money or assets to keep them out of the “marital estate,” the risks are serious penalties and possible jail time. Bad idea. This is not worth the risk.
Think about your career and making more money. You’re going to need it
If you’re currently not working, try to get a job, especially one with health insurance. If you are working, look for ways to advance in your career or increase your income because a divorcing individual will likely need a 30% increase in income to maintain his/her standard of living.
California Document Preparers has helped hundreds of families get divorced
Our dedicated team has assisted hundreds of couples with uncontested Divorces. If you and your spouse can agree on division of property and a parenting plan, we can save you a considerable amount of money.
Guided Divorce: A specially trained, neutral third-party
If, however, your situation is more complex and you and your spouse cannot agree on how to divide your assets and raise your children, CDP’s Guided Divorce may be the right solution for you. We’re a specially trained, neutral third-party who work with divorcing couples to guide them through the issues that have stalled their Divorces. Together we reach a mutually acceptable resolution. There’s no judge, no winning or losing. Instead, our Guided Divorce is based on the principles of negotiation, an open mind and compromise.
We’re responsive and available throughout the process. It starts with an office visit to review the Guided Divorce process. Schedule an appointment today to talk to one of our team. We’re helpful, compassionate and affordable.