Among all the conflicting emotions during the dissolution of a marriage, perhaps only child custody is more fraught than the division of property. Each partner will have a strong point of view about which assets are theirs alone and how much of any jointly owned assets, including bank accounts, they should receive.
Both partners will focus on preserving their own financial assets. Much will depend on the applicable state law and whether your state is one of the “community property” states or not. Either way, there are ways to protect your financial interests during a divorce.
Hire a Lawyer
When you know your marriage is over, the first thing to do is get professional advice about protecting yourself and what’s likely to happen during divorce proceedings. While states have laws governing the division of property, judges also usually have discretion to create what they find is a fair outcome. You need an advocate to prepare and present your idea of that fair outcome.
Your divorce lawyer will advise you on property issues and important concerns like child custody and spousal maintenance. They can also refer you to a tax advisor to protect your interests and an estate attorney to help you prepare a revised will and trust.
Take Inventory of Assets and Debt
Make a comprehensive list of all the property you regard as exclusively yours. Gather financial records that show you purchased the property on your own or earned money separately and kept it separate during the marriage.
Also, pull together records relating to debt, including mortgage, credit cards, personal and student loans, auto loans, or other debt you may have incurred jointly or separately. You’ll still be responsible for loans that are exclusively yours, like student loans. Your divorce decree will establish ongoing responsibility for paying debts according to whether they are yours individually or jointly acquired.
Separate Debt and Get Your Own Accounts
Take yourself off joint accounts and remove your spouse as an authorized user of credit cards you have in your name. Get both bank and credit accounts in your name alone. This will help prevent you from future liability for your soon-to-be-ex’s debts.
Monitor your credit report for potential drops in your credit score. Mistakes can happen when creditors see you closing accounts and opening new ones. Worse, your spouse could run up debts before you have a chance to close joint accounts. Seek financial and legal advice on maintaining your credit score and protecting it from misinformation.
Locate Your Prenuptial Agreement
If you had the forethought to create a prenuptial agreement, pull it out and reread it. The agreement should cover what happens to property in a divorce or at least protect assets you regarded as solely yours when you entered the marriage. A properly drawn up prenuptial agreement is enforceable in court and could save substantial headaches when dividing property under a final divorce decree comes.
The dissolution of a marriage is painful but doesn’t have to be ruinous if you take steps to protect your financial interests during divorce.