Financial Poise
Divorce

4 Steps for Handling Your Finances in Divorce

Preserving Finances in Divorce from Announcement to Aftermath

Divorce really starts when you make the decision to get one. Typically, this represents the culmination of a long period of problem solving, or the recognition that you are faced with an unsolvable problem. Or, perhaps, this decision has been handed to you and you have no choice but to accept it. In any event, the decision has been made and the divorce process begins.

On most people’s minds at this point are two very complicated things: who to tell and who to hire. The latter can especially refer to who to hire to help you deal with your finances in divorce. These are questions to ask and have answered during the main four steps of the divorce process.

The Stages of Divorce

Step 1: The Announcement

The announcement can be a challenging time. Telling kids is a formidable task. These are the people that force you and your soon-to-be former spouse to come together at a time when you likely feel pretty distant.

Your children may react in ways that confuse you, comfort you and maybe even concern you. They may have seen this coming long before you did, which may indicate that their grieving process is well underway. Though your children may be your most worrisome audience, they aren’t the only ones you’ll need to tell.

Parents, friends and co-workers will all be on the list. Expect that some may support you during what author Abigail Trafford calls “Crazy Time.” Others may give unsolicited advice, judgment, anecdotes and the like. You may find friends taking sides or even going silent.

Announcing your divorce includes consulting with a licensed attorney in your state. Another thing to consider is your finances before the divorce is actually finalized. So why do you need to get finances in order before a divorce?

You need to track your income and expenses to help create a budget post-divorce. Take into account that the judge will split assets and debts, and child support may be awarded.

Consider keeping track of anything you spend money on, like the following:

  • Household bills (e.g., utilities, maintenance)
  • Food and toiletries
  • Clothing
  • Entertainment
  • Transportation
  • Child care

Step 2: The Separation

So, will you stay together until the divorce is final and assets are distributed? Or now that you know divorce is inevitable, do you separate immediately?

Whether it feels good, overwhelming, or a combination of both, you have begun the process of starting your newly single life and possibly redefining your role as a parent or co-parent.

You need to consider how you’ll track and share child care expenses. Who will pay for soccer practice? Or school supplies? Make sure you document expenses and consider using a co-parenting app to ease the process.

Step 3: The Divorce

Soon enough you will be facing the actual divorce. Whether you have chosen litigation, mediation or collaboration, there is work to be done.

For many people, taking a hard look at one’s financial life comes with new information, missing information and a huge learning curve. For others, figuring out how to incorporate time with the children becomes a daunting and overwhelming issue.

For both spouses, there will likely be pieces of the marital puzzle missing. How well you cope will be dictated, in part, by how well you both choose to behave as you put the puzzle pieces together. Much of this can depend on how you have decided to access legal and financial help during the finance divorce process.

You should schedule a meeting with a financial advisor to speak about your bank accounts, your estate plan and insurance policies where your spouse is listed as a beneficiary.

Step 4: The Aftermath

Once the paperwork is complete and the judge has ruled, you are officially divorced. But the divorce process continues; there is life after divorce. This represents your transition into a newly single life.

This is the time when you figure out what your life will look like without your spouse or if you’re looking to remarry. You may even be newly employed or seeking to enter the workforce in a new or different way.

The aftermath can last a very long time, but it’s best to be financially prepared.

Some important points to consider are debts and taxes:

If you want the house or apartment, just remember you’ll be expected to pay the mortgage, but your former spouse will still have a financial obligation to your creditor.

And don’t forget about credit cards. Consider the following questions:

  • Whose name is on the card(s)?
  • Does the non-debtor spouse have charging privileges on the card?
  • Will you or your former spouse have charging privileges frozen?

The third big financial aftermath to consider is taxes. Keep copies of joint tax returns for the last 5 years. Organized documentation will help you calculate the cost basis for assets, especially when negotiating a settlement.

If you have children, dependents, the primary caretaker will benefit if he/she files as the head of the household.

Be Proactive About Your Finances in Divorce

Divorce isn’t easy, but the most crucial piece of information about divorce is that it is finite. You will gather your resources, your strength and your ability to forgive yourself for moments where strength and resources are nowhere to be found. You will look in the mirror and start to recognize the return of normalcy. You will learn the value of self-care, and you will reenter the world as a single adult with renewed goals and the joy you deserve. In the meantime, don’t drop the ball on your finances in the divorce process.


[Editors’ Note: To learn more about this and related topics, you may want to attend the following webinars: Common Issues and Strategies in Business Breakups and Goal Based Investing- Planning for Key Life Events. This is an updated version of an article originally published on May 16, 2019.]

©All Rights Reserved. July, 2021.  DailyDACTM, LLC d/b/a/ Financial PoiseTM

About Carrie Weiner Rosenbloom

Carrie Rosenbloom is a licensed marriage and family therapist, and attorney mediator in Ann Arbor, Michigan. She specializes in helping individuals and families navigate the complexities of divorce. Carrie also works with family businesses, helping them manage transitions, create succession plans, resolve conflict, and integrate a cohesive culture throughout family owned businesses. More information can…

Read Full Bio »   •   View all articles by Carrie Weiner Rosenbloom »

follow me on:

Article Comments

>