Dealing with divorce and finances
Divorce can strain finances as well as emotions. But preparation and financial planning during and after divorce can help you protect your financial interests and take charge of your future well-being.
If you and your spouse agree on most issues, an uncontested divorce may help you avoid costly legal fees. If you need an attorney, preparing for divorce in advance can save time and money. Either way, you'll want to make sure your immediate finances are in order.
Reviewing the checklist below and taking the appropriate steps can help take the stress out of preparing for divorce:
- Talk to an advisor. Go over the financial planning process so you can prepare a budget to follow until your divorce is finalized.
- Compile monthly bank statements. You should also make copies for your attorney.
- Locate all tax returns. Be sure to locate and make copies of those that were filed jointly or separately.
- Check tax payments. Make sure all taxes have been paid to date.
- Visit safe-deposit boxes. Determine if any shared contents should be separated.
- Avoid large purchases. This may cause financial complications while going through the divorce process.
- Don't move out of your home. Consult your attorney prior to changing locations.
- Share documents with your attorney. Do not sign anything away prior to divorce.
What to do during and after divorce
Look ahead, not back. Assess your current financial situation and rework your long-term goals. This can help you plan for the future while you manage your daily needs.
- List income and expenses. Ensure the list includes your current finances, as well as what you'll have once you are divorced. Do you earn enough to support yourself and your family?
- Identify your assets. Make a list of all your assets, their value and whether they are owned jointly or separately. Which assets do you really want and which ones are you willing to let your spouse keep?
- Deal with liabilities. Will you be able to pay outstanding debt on the assets you keep? Assess your and your spouse's liabilities and obtain credit reports.
- Know the employee benefits. Make sure you understand the specific benefits that you and your spouse are entitled to, as well as the life, health and disability insurance policies that you both own through your employers. If you have children, whose health insurance plan will be used to cover them?
- Consider child or spousal support. Will you be paying or receiving child support or spousal support?
Other financial considerations when planning for divorce
Going through a divorce requires you to examine your entire financial life. Your attorney, tax professional or financial advisor can help you work through any other financial questions that may come up:
- Should any beneficiaries change on your life insurance policies, investments, wills, etc.?
- Will the divorce decree provide a payout? If so, will a qualified domestic relations order (QDRO) be used?
- What are the tax consequences of support you may provide or receive, such as spousal or child support?
- How will you handle your tax return, depending on the timing of your divorce?
- Will your home be transferred to either spouse as part of the settlement?
How we can help with financial planning in divorce
Life can change at any time. Our approach to financial planning in divorce is expressly designed to adapt to evolving needs. An Ameriprise financial advisor can help you with the complex financial decisions you face during a divorce and plan for your future goals.