Protect your finances during a divorce:
(Disclaimer: I am happily married to the father of our four beautiful boys. The situation I describe below is from a divorce I went through years before I met my husband.)
My divorce was filed in Florida in 2004. None of the information in this post is meant as legal advice and the laws may have changed or not be applicable to your area. I am not encouraging anyone to get a divorce. However, when a divorce is imminent, it’s only prudent to know how to prepare and protect your financial life accordingly.
I met with a family law attorney to validate the information in this post for accuracy, and to make sure I touched on as many financial aspects of a divorce as possible.
It was late summer 2004. The strength I felt that day, the way the sun shined brighter than normal, the sweet smell of the gardenia bush by the front door are all things etched in my memory.
I paced around the living room floor after I hung up the phone.
I had just told my (then) husband: “we need to talk when you get home.” He boldly asked “Why? Do you want a divorce?” His word hung in the air for what seemed like an eternity. My mind was racing, I could barely hear anything because my heart beat was SO LOUD. I gathered up the courage, from where, I don’t know. With a steady and clear voice I said “YES. I do. Things aren’t going to change here unless I make the change, so YES!”
The silence on the other line was deafening. He had defeat in his voice when he said “OK, I will be home as soon as I can.”
(This true story of leaving a domestically abusive relationship was hard for me to write a while, but I did it!)
Our divorce could have been simple. It very easily could have been handled out of court with minimal papers filed, minimal costs and especially no attorney’s fees, but no – that’s not how it should go.
For a couple who shared nothing other than debt and liability, the divorce turned ugly real quick. I will spare you the details.
After months of arguing, I decided that I needed peace in my life and that fighting over debt was a waste of my time and energy. Right or wrong, in order to finalize the divorce and get back my maiden name, I took on all the consumer debt we had accumulated – and it was a lot. But I had so much faith in my future that I knew I would be able to pay it off within five years (and I did!).
Life lessons on how to protect yourself and your finances during a divorce:
The divorce left me with life lessons I need to share, in hopes that others learn from them.
- Know your rights.
- Don’t ever get bullied or intimidated by your spouse to sign ANYTHING under duress.
- (Documents signed under duress MAY not be legally binding).
- Know your family’s complete financial picture.
- (My ex-husband and I both worked in financial services at the time, so we were on top of our finances. However, I hear too often from friends that they aren’t aware of what their family’s financial balance sheet looks like.)
- Do you know where your mortgage is held? How much you owe and what the interest rate is?
- Do you have life insurance? Is it term or whole life? Who is the carrier and the agent on the policy?
- Who is your healthy insurance provider? Is it in your name or your spouses?
- How much do you and your spouse have in retirement assets? Are they held in 401(k) accounts, ROTH IRAs or traditional IRAs?
- Do either of your have any pensions or annuities?
- How many checking and savings accounts do you have? Are they in joint, individual or held in the name of a family trust?
- Do you have any stock trading accounts? What are balances and the titles of those accounts?
- Who are your home owners/ renters insurance carrier and car insurance carrier?
- How many credit cards do you have? Are they in joint or individual name? What are the balances and interest rates?
- Do you have online access to all the above referenced financial information? Or do you know where the paper statements are kept?
- Know where your personal documents are stored.
- Make sure you have access to your social security card, passport and birth certificate.
- (I am not advocating for you to skip to the country, but those documents are necessary for you to conduct official business and open new bank accounts.)
- Have cash for living expenses.
- In case your spouse takes off with your cash, depletes your accounts and maxes out your credit cards, do you have money set aside for living expenses?
- (THIS happened to me – and I had NO money set aside.)
- Are you the owner or co-owner of (at least) one of your family’s vehicles?
- Otherwise your spouse can report the vehicle stolen if you drive it. I also learned this the hard way.
- You should also know the terms of your vehicle’s loan/ lease agreement and the amount of the monthly payment.
- Know that you don’t HAVE to hire an attorney to finalize a divorce.
- The divorce can settle out of court, which will save you (and your spouse) a lot of money. However, this requires that the two of you are able to amicably work together to reach a final agreement, or at least work with a mediator, which is cheaper than both parties hiring attorneys.
- The finances must be kept status quo until the divorce is final, if one of the parties in a divorce is financially dependent on the other.
- From the time the divorce has been filed until it is final, all financial contributions and distributions must be kept the same.
- If you (and/ or your spouse) contributed a certain amount to manage the household, you must continue to contribute the same amount.
- If your spouse stops paying household expenses, you can request a temporary relief hearing. The judge will then award temporary relief until the final hearing. (This is applicable in Florida. The rules may be different in your state.)
- Both parties may be responsible for any debt or liability either of you incur during the separation.
(The story of when I left a domestically abusive relationship has helped a lot of women in a similar situation.)
- Start thinking of your financial future as soon as possible, if you are a stay-at-home mom and you feel a divorce is imminent.
- How will you support yourself (and your children)?
- Even if you qualify for alimony, those funds will more than likely only be awarded for a number of years. Start as soon as you can, to think of your own career and future.
- Do you have an education? Is there continuing education courses you can take to brush up on your skills?
- Is there a business you can start?
- Can you begin evening or online classes to take a certification course or higher education?
- Set up new accounts in your individual name.
- Get your own cell phone, transfer utilities into your own name.
- Start managing your own household finances, if you haven’t done so in a while.
- Shop around for new car insurance, cell phone service, and household maintenance contracts.
- Now is the time for you to take charge and pinch pennies where you can – it will benefit you in the long run.
- Last, but not least, don’t fight over things that aren’t important.
- You may find that you compromise more than you originally had planned.
- However, dragging the process out for the sake of getting the old lazy boy recliner isn’t worth your time or energy. If you can buy the item new, then let it go.
- Oops, one last one: Don’t give up fighting for the things that truly matter:
- Your children, your sanity and safety.
- Everything else can be replaced!
I hesitated writing this post, as it dug up memories from a time in my past that I have brushed aside and happily forgotten about.
However, I realize that my experience may help someone else. Even if just one person reads this and feels empowered, then my job here is done.
In the introduction of this post, I shared how I felt the day I asked for a divorce. Please know that this was not a decision I took lightly or came to easily. However, once I made up my mind as to how to proceed for my own health and wellness, I charged forward.
I have said this many times since that day: “divorce brings out the worst in people.” Before you make your decision, listen to your heart, seek counseling as an individual or as a couple and exhaust all possibilities before heading towards a divorce. But that being said, once you know that a divorce is the next step, find your strength, get your support network in place and stay strong.