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As a divorce approaches, you need to prepare yourself financially,
both for the divorce process itself and afterwards. Essential
steps are getting organized for the financial settlement and
establishing your own credit history.
The Divorce Process
The process of getting a divorce has 3 phases:
1. Pleading: filing petitions and beginning the process
of divorce in court.
2. Discovery: an attorney researches your financial
background and gathers information about you and your spouse.
3. Trial: this step is not always necessary, especially
if there are not significant assets, or if you and your spouse
agree on the settlement and division of property.
The most expensive phase, in terms of attorney's fees, is
the discovery phase. You can drastically cut costs (especially
if the attorney is paid by the hour) if you do this legwork.
Getting Organized
Here is a list of information and documentation that you
can provide to reduce your legal fees:
- Income tax returns from the past 3 or more years
- Joint business account records
- Mortgage information
- Pre- or post-nuptial agreements
- The most recent statements of bank accounts which are
in your name, your spouse's name, and joint accounts
- A copy of both spouses' paycheck stubs
- The most recent brokerage, pension, and 401(k) statements
for you and your spouse
- Both spouses' Social Security Earnings benefit statement
- A copy of both spouses' employee benefit statements
- Copies of deeds in your or your spouse's name
- Records of inherited property
- Copies of your will and your spouse's will
- Your credit card statements and any other financial statements
and cancelled checks
- A credit report for you and your spouse to check for
outstanding liabilities
- A list of all other assets (including cars, antiques,
jewelry, etc). Some of these items may need to be appraised.
- A list of the assets which you would like to keep
- If you have children, create a record of the time you
spend with them per week, including any activities which
you do together
- All insurance information (health, house, car etc.)
- Any business partnership agreements
Once you've identified all assets and liabilities, separate
them into joint assets, your assets, and your spouse's assets.
Anything accrued during the marriage is usually considered
joint assets, whereas anything you brought to the marriage
or bought or received after the separation are your assets.
It is possible to go through the divorce process without
an attorney. You can file the documents at the courthouse
and appear before the judge at a hearing. However, it is not
advisable to do this unless you expect the divorce to be an
easy one--free of disagreements and complicated division of
assets.
Establishing Credit
Women often let their credit history lapse when they are
married. If all financial accounts, leases, credit cards,
and bills are filed jointly, your personal credit history
stops building. Why is this important?
After a divorce, it is likely that you will want to qualify
for credit, perhaps for a car loan, home mortgage, or for
financial emergencies. A good way to build your own credit
history before you're divorced is to open a credit card in
your name only. To build a history, you must use the card,
but it's essential to build a good credit history by paying
off your balance in full every month.
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Financial
Preparation
