Divorce And Money: 7 Tips To Make The Transition Easier Financially
As a practicing family law attorney in Atlanta, I am often asked about financial pitfalls to beware of before filing for a divorce. Divorce actions are often plagued with heavy debts and painful legal costs. However, some foresight and planning can help you steer clear of financial nightmares.
1. Learn to live off of one income
One of the best aspects to marriage is having a partner in life. This includes the ability to afford homes, cars and other items that you previously could not afford on one salary. Following, the breaking of that union often means that one party can afford the items without the other. Thus leading to foreclosure of homes, repossession of vehicles and defaulting on loans. It is important to make large financial decisions based on the income of one person. Therefore one spouse can comfortably assume a debt while protecting both parties’ credit scores and financial security. There are other benefits to living of off one income, including stability during layoffs and illnesses.
2. Keep your finances separate
I am sure that every marriage counselor in America would disagree with me but I recommend separate bank accounts, retirement accounts, savings accounts, etc. By separate I mean titled in your name without commingling of your spouse’s income or assets. Please be aware that in some jurisdictions “separate” accounts or portions within them may still be considered marital in the eyes of the law. Nonetheless, the separation allows for smoother division at the time of divorce.
3. Keep great records of your finances
It is important to have a file system that allows quick access to bank statements, mortgage documents, tax returns, and other important financial documents. This allows you to provide any documents needed by legal, financial and tax advisors before actually filing for a divorce. It is often difficult to find these documents after a divorce has been filed and the relationship has become strained.
4. Have Your Own Income
Disclaimer: Those married to the top ten percent may skip this section of the article, but for the rest of us it is important to always maximize on your earning potential. Even if you decide not to work during the marriage, be sure to stay on top of your field; volunteer, attend functions and network. Try taking classes at your community college and even consider starting a home business. Having your own form of income allows you to avoid desperate, premature settlements and months of destitution after a divorce.
5. The prenuptial agreement
I always, always recommend a prenuptial agreement. Of course if you are already married, depending on your jurisdiction, a prenuptial agreement may no longer be an option. Though many couples frown at the thought of divorce before they are even married, prenuptial agreements can help separate emotion from divorce and overvaluing or undervaluing assets during negotiations. Prenuptial agreements in many cases can provide for the distribution of property, alimony and attorney’s fees. Finances are very contentious aspects of a divorce and when both parties go into it knowing the terms it can make for a smoother and less aggressive divorce.
6. Communicate with your spouse
I have had divorces go smoother simply because a certain level of respect was maintained and the parties constantly spoke to each other. This can help to avoid nasty litigation and exorbitant legal bills.
7. Save, save and save more
I have never had a divorce where too much money was a problem.
Article by Attorney Anita M. Lamar, Esq of Lamar Law Office in Atlanta, GA where she practices domestic law.