Getting divorced can drain a couple financially. To ensure your divorce doesn’t bankrupt you, you should take action to protect yourself monetarily. In this article, we will discuss the ways that you can financially prepare for your divorce as well as important financial concerns during each stage of your divorce.
Financial Steps to Take Before Getting Divorced
If you are considering divorce, you should develop a plan financially and take certain monetary concerns into consideration before you file. Before filing for divorce, you should:
- Get information. Do you have a list of your and your spouse’s bank accounts, credit cards, investment accounts, and other financial information? If you are not typically involved with household finances, you should try to collect information about your shared and separate accounts. Having this information will help you determine what funds you will have access to once you share your intent to divorce and can be helpful later (during the division of assets and debts).
- Create a budget. Consider what expenses you may need to take on alone once you separate and draft a budget that outlines your current expenses versus your new expenses once you separate.
- Consider your future living arrangement. Once you file for divorce, do you plan to live separately or continue living in a shared residence? Will you need to draft a cohabitation agreement to outline the financial and behavioral responsibilities of each partner while living together? Can you afford to live alone in the current market?
- Draft a list of your shared and separate assets and debts. Pennsylvania is an equitable distribution state, which means that your assets and debts will be divided fairly not necessarily equally or 50/50. Having this list will help during your divorce, but the list will also help you consider whether you have assets and debts that may be commingled, what assets you want to walk away with after the divorce, and whether you need to consider how money from investment properties or assets will be managed during the divorce.
- Review your tax returns. If you and your partner file jointly, you can see your annual marital income, information concerning tax-deferred accounts (i.e. retirement accounts, 401Ks, etc.), and other important financial information. The information found can be used later when determining child support or alimony. Contributions made to a pension, IRA account, or 401K are also subject to distribution if either spouse made contributions to the account during the marriage.
- Consider your Social Security. If you and your partner have been married for at least 10 years, you may be eligible to receive Social Security benefits on your spouse’s Social Security record.
- Apply for another credit card. During or after your divorce, you may struggle to obtain a new credit card or to open a new credit account because your income has decreased, and the divorce may impact other financial aspects that affect your eligibility.
- Think about the cost of a divorce. Before getting divorced, consider how much a contest vs. an uncontested and no-fault vs. fault-based divorce can cost. To minimize your expenses, an uncontested, no-fault divorce is your best option, and by using our divorce wizard, you can file for an uncontested, no-fault divorce for only $249 (including court costs).
- Consult with a financial professional. Just as you need friends and other supporters in your corner, you should get support for your financial concerns during your divorce. Whether you consult with an accountant or even a forensic accountant that can help you better prepare financially and have a monetary strategy for the divorce.
Financial Considerations During Your Divorce
Here are a few actions you can take during your divorce regarding your finances.
- Monitor your expenses. Not only is it important to ensure you save money and adhere to your budget, but you should also monitor your joint accounts to ensure your partner does not waste or attempt to hide marital funds.
- Document the use of marital funds. If you believe your spouse is using marital funds wastefully or irresponsibly, you will need to substantiate that claim. Keeping detailed records or keeping track of bank records and account updates can be helpful.
- Think about health insurance. If you are on your spouse’s healthcare plan, you should make a plan concerning how you will gain coverage after your divorce.
- Consider the tax implications of certain decisions. Determinations regarding the division of property, child custody/support, and alimony can have a bearing on your taxes. You should consult with an attorney to understand the specific implications.
Financial Steps to Take After Your Divorce
Once your divorce is finalized, you will likely still need to have time to adjust to life post-divorce. To help you acclimate and transition smoothly, here are some actions you can take to prepare financially for life after divorce.
- Open your own checking account. If you do not have your own checking and savings account, now is the time to open one. After the divorce is finalized, you can also take action to close previous accounts.
- Think about your estate planning documents. You should revise your estate plan, especially any trusts, wills, retirement accounts, or payable on death accounts that you have.
- Adhere to your court-ordered agreements. Even if you are upset about having to pay child support or alimony, you should adhere to your court agreement and make your payments on time. If you do not pay alimony or child support and have arrears, you can face being found in contempt or having your wages garnished.
- Revise your budget. Now that you are actually living with new expenses; you can more accurately budget and create a plan for your finances.
Affordable Divorce Services in Pennsylvania
At Cairns Law Offices, we are dedicated to helping couples file for divorce at a low cost. With as little as a $29 down payment, you can start the filing process for an uncontested, no-fault divorce.
Learn more about our services by calling (888) 863-9115 or reaching out online.