Divorce and separation can be very expensive. Spending a lot on lawyers is inevitable when it comes to the long and drawn out process of divorce.
Whilst the cost of filing for divorce in New York can cost between $15,000 to $20,000, it can also affect everything from mortgage payments to insurance, childcare and utilities.
It is inevitable that you will suffer financially when you divorce. Ideally both parties will share an equal financial hit, but this is not always the case. With that in mind, below is a list of 6 ways to understand and protect your money during a divorce.
Ensure the Paperwork is Correctly Filled Out
There is a lot of paperwork involved in a divorce. It can be both confusing and stressful to have to deal with it all. This is why it’s important that you use professional help in order to fill it all out correctly and file it in the correct order.
Filling out the paperwork incorrectly could lead to an error that could negatively impact the finances of one or both parties.
Be Transparent and Do Not Hide Money
It may be tempting to hide money if you feel that your spouse is untrustworthy, but this is not advised. Hiding money can lead to an escalation of conflict, legal fees, and a loss of credibility in the eyes of your judge, arguably the most important person in your divorce.
It is important to preserve your marital assets and income in a divorce, but transparency is key. If possible, all financial decisions leading up to, and after, a divorce should be undertaken with the knowledge and consent of both parties.
Learn How Much Money You Have
Many attorneys recommend that the first thing to do when you have decided on divorce is to figure out what money you and your partner have. This means knowing the balance of both party’s 401(k), savings plan, credit card bills, 529 accounts etc.
Once you have a good idea of that total, you can start to form an opinion about what you own and your potential financial future upon a divorce.
Separate Your Bank Accounts
If you do not have your own checking and savings account, then it’s important to get them as soon as you decide to divorce. If your money is in a joint account, you might become concerned that the other spouse will abruptly withdraw all of it. There is a risk of this, although your judge will not be happy with it unless there is a legitimate reason.
If you are concerned that telling your ex that you want to start separate accounts could mean that you end up with nothing, you should consider withdrawing half the money into a single account. However, it is important to immediately tell your spouse that you’ve done so. Transparency is key.
Start an Emergency Fund
If you opened a separate savings account, this could be used as an emergency fund. Or, alternatively, you could open a second savings account just for emergencies. It’s important to have a savings account that is an emergency fund that you are able to access and cannot be touched by anyone else. However, you should not keep that new account a secret. Again, transparency is important.
It will give you peace of mind to know that you have money, or potential lines of credit, that you are able to access if need be. This is particularly true if the majority of your assets are held only in the name of your spouse.
Hire Professionals to Help
Hiring professionals may mean hiring a divorce attorney, but it could also mean instead hiring a mediator. A mediator is an individual who represents both your and your spouse, and can help the two parties come to an agreement that is satisfactory for both. (Source: Divorce Bob)
You may also want to hire a forensic account firm to work for you. This is when professionals look through both you and your partner’s portfolios to see if any money is being hidden from you. However, this is a very expensive option and unnecessary for most couples.
The point is that if you want to save money in the long term, you will have to spend some. Because the decisions made during a divorce will affect the rest of your life, you do want to ensure that your financial affairs are settled in a way that is fair for both parties.
Without professional help, you and your partner may unintentionally make a mistake that costs you, or both you, dearly. Using professionals is a good way of avoiding financial mistakes.