Divorces involve settling a wide range of issues — including the division of assets and debts, and in some cases the assignment of alimony or spousal support.
While the proceedings can be lengthy, it’s important to advocate for yourself throughout the process because the decisions are binding.
If you’re not sure about the best course of action before, during and after a divorce, read on for advice from financial experts.
Financial Steps To Take Throughout a Divorce
Navigating a divorce is often complicated, but these steps can help you protect your financial interests.
Before the Divorce
As you prepare for a divorce, set aside time for an in-depth assessment of your financial situation.
“The most important thing for someone going into a divorce to do is to become knowledgeable about their own family finances,” Reid A. Aronson, partner at family and matrimonial law firm Aronson, Mayefsky and Sloan, said in an email.
Aronson recommended asking yourself the following questions:
— How much do you and your spouse make?
— What account or accounts does that money go into?
— What are your monthly expenses?
— Which of those expenses are fixed (e.g. housing, private school tuition, medical insurance) and which are flexible (e.g. food, clothing, vacations)?
— What assets do you have and what institutions hold them?
“Uncertainty about finances can create a tremendous amount of added anxiety, and anxiety can lead to very poor decision-making, including decision-making regarding litigation or settlement,” Aronson said.
It’s important to gather the information without the help of your soon-to-be ex-spouse.
“Don’t rely on the information your ex gives you because they’re not on the same team anymore,” Rachel Burns, a certified financial planner at True Worth Financial Planning, said in an email.
Further, consider getting professional guidance.
“Once you know you’re about to go through a divorce, it’s prudent to bring financial professionals into the mix,” Sarah Jacobs, co-founder of New Jersey-based matrimonial and family law firm, Jacobs Berger, said in an email.
She explained that accountants and financial planners can bring you immense value, especially if you’re moving, selling assets, filing taxes and looking to build credit.
“While your divorce attorney should be savvy and ask the right questions, they aren’t financial experts,” Berger said.
[Looking for an Advisor? Find a Financial Advisor in Your Area Today. ]
During the Divorce
Once the divorce is underway, make sure you know where your priorities lie.
“Thoughtful, educated decisions, focused on what matters to you, are the best way to settle a case. Define what ‘winning’ really means, and then let the law work for you to achieve those goals,” Jacobs said.
From there, the key is staying focused on the outcome you want and engaged in the proceedings.
“Divorce can be a long, draining process, but you need to stay vigilant when it comes to the finances. You’ll be making decisions that will likely impact your finances for many years to come, and you can’t go back and change them once it’s done,” Burns said.
It can also help to start thinking about lifestyle adjustments you may need to make.
“Many of a family’s largest expenses, especially housing, are going to be much higher post-divorce. This means that for the vast majority of people, their lifestyle post-divorce is going to have to change because the family income cannot maintain two households at the exact same level that it maintained one household,” Aronson said.
The sooner you can accept the changes you need to make and adjust your expectations, he said, the easier it’ll be to resolve the divorce and move forward.
[READ: Hidden Costs of Divorce: Learn How to Prepare for Them]
After the Divorce
When the divorce is settled you can breathe a sigh of relief and begin building the future you want. A good place to start is reassessing your financial goals, which may have drastically changed during the divorce.
“These might include short-term goals like replacing a car or buying a home or long-term goals like retirement,” Burns said.
From there, strategize a plan to bring your goals to life.
Once a person knows what their finances will look like after the divorce, they should put together a long-term financial plan with a certified financial planner if they can afford to do so, Aronson said.
“In particular, if your settlement agreement creates future obligations, like paying for college, make sure that your plan provides for paying those obligations,” Aronson added.
[Related:5 Financial Considerations of Gray Divorce]
He also recommended planning where you want to be 10, 20 and 30 years down the line.
On a final note, don’t be too hard on yourself. You’re starting over, so give yourself time to find a new rhythm.
“If you’re feeling overwhelmed by your post-divorce finances, you’re not alone,” Burns said. “No one expects you to be a financial expert, and you don’t need to feel embarrassed about a lack of financial savvy. However, you are solely responsible for your finances going forward, so now is a great time to take an active role.”
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Financial Steps to Take Before, During and After a Divorce originally appeared on usnews.com
Update 05/24/24: This story was published at an earlier date and has been updated with new information.
