Divorce and finances: steps for success
Divorce is difficult on many levels. In addition to ending a personal relationship, a divorce symbolizes the end of a financial partnership. Like any partnership, one spouse may have had a more intimate understanding of the financial side of the relationship. This can cause the other partner to fear for his or her financial well-being after the divorce is finalized.
These concerns could include worries about whether you will receive a fair share of the marital assets during the property division portion of the divorce as well as unease about the prospect of managing finances on your own after the divorce is finalized. Taking some basic steps can help to better ensure financial success after the divorce is completed.
Steps to take before the divorce is finalized
The most important thing to do before the divorce is finalized is figure out what your assets are. Assets accumulated during the marriage are generally split between the couple, with a few exceptions. Take the time to make a list of all the assets that you, as a couple, own.
Make sure the list includes retirement assets like 401(k) and pension accounts as well as any stocks, bonds and closely held businesses. Personal property and real estate should also be included.
After all the property is accounted for, it must be valued. This is the process that determines how much each piece of property is worth. Valuation is completed by an assessor and can be a contentious issue. If there are questions about the value placed on a piece of property by an assessor, scrutinize the information the assessor used to calculate the value. Look for obvious errors. If the valuation is for a home, mistakes could include not counting all the bathrooms in the home or overlooking a serious issue like a cracked foundation. If for a business, make sure any prospective new clients or acquisitions are included in the calculation.
Steps to take after divorce
After the assets are accounted for and valued and a distribution plan is determined, take the time to make a new budget to reflect these changes. Take into account any alimony or child support. Also consider employment and investment income as well as living expenses. Consider downsizing your home if money seems tight. Double-check insurance policies, as some may have been covered through a spouse’s employment. If you need additional coverage, start getting quotes and find a policy that works for you.
It is important to carefully analyze property during a divorce to help set yourself up for financial success after the divorce is completed. As a result, it is wise to contact an experienced property division lawyer to better ensure that you receive the property you are legally entitled to.