As you cope with the emotional weight of your separation, it’s important to stay mindful of your money. The reality is that divorce is a significant life transition–both personally and financially. Making the right moves with your divorce and finances will protect your future, as well as that of your children.
While there are many financial logistics to cover during your divorce, here are some key steps to keep in mind.
Take a Financial Deep Dive
Once you and your spouse decide to separate, you need to get a clear picture of your finances. Take a look at all of your accounts, both separate and shared, and print out statements for everything. You want to know which accounts, investments, and loans are in your name.
List exactly how much debt you hold, as well as how much you have saved for retirement. You should also take inventory on all of your assets. Gathering this information provides a clear picture of what you own and which assets you want to protect.
Hire an Experienced Lawyer
You want the best professionals by your side during a divorce. An experienced divorce attorney will help you negotiate with your spouse while advocating for you through the process. This is especially important if your divorce is less than amicable. Your lawyer will protect your financial interests when you divide up your assets.
Open Your Own Accounts
Even if you and your spouse are on the same page in the divorce, you want to avoid the risk of joint accounts. Open your own checking and savings account as soon as possible. Then move half of the money into an account in your name if possible. Make sure you redirect your paychecks and other sources of income to your new account.
You and your spouse will also want to freeze or close your joint accounts. This will prevent any reckless spending or sudden withdrawals.
Consider Tax Implications
Taxes can be a logistical headache during divorce if you don’t plan ahead. When separating your finances, keep tax implications in mind during every step. Some people make the mistake of giving their spouse the tax-free assets and unknowingly accepting future tax burdens. You’ll also want to review how alimony and child support might affect your tax outcomes.
And remember, the IRS won’t recognize your divore if it isn’t finalized by December 31 of the tax year. So, your filing status might not shift to single or head of household until the following year. This means you’ll need to prepare to file as married, either separately or jointly.
See a Financial Advisor
Going through a divorce often means rethinking your life plan. And this can be stressful. A financial advisor will help you make decisions to protect your interests and support your family. They can help you determine how much income you need, what your priorities are, and what changes you might need to make to reach your goals. When it comes to money after divorce, you likely have a lot of questions. The financial advisors at Second Opinion Partners will be on your team during your divorce. Our money experts specialize in all of life’s transitions, and we help you get on track with our LifePrint® Advantage. Contact us today to discuss your financial goals.