4 Helpful Financial Tips When You're Dealing with Divorce & Separation

By Susan

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Last Updated: September 22, 2021

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No one tells you how hard it is to separate and/or go through a divorce. 

Along with the emotional hardship of seeing the end of one of your most important relationships, divorce also entails dividing assets and arranging for your financial future following the ultimate break-up.

You will have a lot of things to consider in the aftermath of your marriage, but making sure you come out as financially healthy as possible should be a top priority. It can make it much easier down the road.

Here's some of the best financial advice for dealing with divorce.

 

Create a Detailed Checklist of Everything

Even though this trying period can leave an indelible impact on both parties, it is critical to take the financial aspect of your divorce carefully.

Knowing your responsibilities and rights, and acting properly on them, will help you move into a new stage of life and safeguard your possessions in the future.

A smart place to start is to create a detailed checklist of everything that needs to be done. The following tips would guide you through this delicate but important process.

  • Taking the time to handle and identify all essential papers is one of the most critical things to accomplish throughout the separation.
  • Untangle every financial mess, regardless of how much time it takes.
  • As long as you and your soon-to-be-former spouse share the same living space, make sure you both pay your utility bills.
  • After you've decided who stays and who goes, be sure to update any pertinent billing information so that bills and invoices are sent to the correct individual.
  • All joint bank accounts and credit cards should be closed.
  • Create a new bank account in your name if you haven't already.
  • If you used to have your account but your spouse knows your PINs and other security details, make sure you update them.
  • Modify your insurance policies and leasing agreements, as well as your will, if applicable.

 

Divide Your Assets and Make a Plan for Any Mortgages

Be careful to put all of your assets on paper before planning the division of your assets between you and your ex-spouse (or, of course, list them electronically).

You may not require any extra assistance if communication is good between you. If you and your spouse are unable to reach an agreement that benefits both of you, hire a lawyer or call a family conflict resolution service (e.g. a mediator).

Mortgages are particularly essential since missed payments may make the issue much more complicated, posing a danger to your financial future.

Notify your financial institution (and any other lenders) of your separation, and suggest that any withdrawals require both your and your spouse's signatures.

If your ex-spouse is the legal owner of your family home and your name does not appear on any official documents, get legal advice before acting on your own.

Looking for more financial advice around your divorce? Read this next: Divorce Isn't Easy, make Sure You Consider These Important Financial Issues

 

Personal Finances: Keep Track of Your Earnings and Expenses

It's never simple to separate your money from your spouse's. To analyze your position, you must once again write everything down on paper or in an electronic format.

Make a customized budget for your post-divorce living by jotting down your expected income and expenses to obtain a clear picture of your finances.

Only then can you start thinking about how you'll share your earnings. If you're thinking of asking your ex-spouse for alimony or child support, make sure you tell them beforehand. It would be ideal if you could agree on your own.

However, if you feel you should get financial assistance from your spouse but don't agree on the amount, it's advisable to seek legal advice to help you through this scenario.

Only 30% of child support due each year is ever collected, according to the US Census Bureau. As a result, whether court-ordered or not, be wary of staking your financial future on child support. If at all possible, choose mediation over a court-ordered divorce.

Some couples can go through a divorce in a peaceful, kind manner while still respecting each other's needs and viewpoints. Don't blame yourself if your separation process doesn't look anything like this. This tense period takes a significant emotional strain for both parties.

If you and your partner can't seem to agree on anything, you're probably considering filing for divorce in court.

However, from a purely financial standpoint, this isn't the greatest option. Consider professional mediation or arbitration instead of going to court if you want expert help that will save you money in the long run.

 

When the Divorce is Finalized!

After your divorce is finalized, be sure to address individual loans and keep detailed records of them. This covers any outstanding student loan payments as well as personal life insurance coverage.

If you and your ex-spouse have joint life insurance, you might agree to terminate it so that you can withdraw and split the money, then obtain new policies separately.

If you have life insurance in your name and need money after the divorce, you could consider cashing it out. But this should be only if it's very essential and you're intending to use the money wisely.

Although going through a divorce leaves an indelible scar, don't allow it to keep you from managing your finances with care and precision. You'll be able to move on when your divorce is finalized, free of additional debts or other financial commitments that might cause you problems in the future.

Even if the court has instructed your ex to make the monthly payments, keep a careful eye on payments if creditors refuse to cancel or split joint accounts. Regardless of what your divorce order says, if your ex stops paying payments, the creditor can pursue you.

 

In Conclusion

While it's not always planned beforehand that any relationship or marriage won't last, however, divorce shouldn't sabotage your financial capabilities and freedom. Carefully follow those tips and seek professional advice where necessary

Photo by Kelly Sikkema on Unsplash

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