November 28, 2023

Divorce is stressful. Separating your assets and finances can take an already emotional time and make it feel even more high stakes. While we all want to hope that our ex-partners will behave fairly, the reality is that when it comes to the financial aspect of divorces, some will not. To avoid financial misconduct, there are things you can do to protect yourself and your financial future.

Don’t Wait to File for Divorce

Once you’ve made the decision to divorce, make the separation legal to protect yourself. Filing for divorce will not only signal the start of your new life, but will help protect the status quo as of the date of filing. Having the date of filing on record will ensure that you have begun the separation process, and can help ensure that you can make the right financial moves moving forward. If you know you are going to file, It may not make sense to wait.

Get the Right Value for All Your Assets

It’s important to get all your property correctly valued before you begin the division of assets. For couples that have substantial assets, whether they are business or personal, it is well worth it to have an expert valuator go through the assets and make sure they are valued fairly and correctly. An appraiser can take care of valuing your home and any other property you own, a business valuation expert can determine the value of your business, and a forensic accountant can analyze financial records and accounts. Having a full picture of your assets, along with the accurate value, will ensure that the assets are divided fairly.

Gather All Documentation Needed

There are many documents that you are required to disclose when filing for divorce. You will both need:

• Your income tax records for the past three years for both personal and business.
• Any credit or loan applications from the past three years.
• If applicable, all business financial statements from the past two years.
• Real estate documents showing title and value.
• All documented debt, including outstanding balance and payment terms.
• All personal financial account statements from the most recent period.
• All investment statements.
• All retirement accounts.
• The most recent bank statements for all accounts.
• A current income statement for both partners, and a sworn statement of gross and net income.
• Monthly childcare expenses, if applicable, but particularly when one partner is seeking child support.
• All health, life, and property insurance information.

In addition, although this documentation is not needed by the court, both partners should get a copy of their credit report and monitor activity during the process. It is important that both partners are transparent with their financial picture. Attempting to hide or alter assets is considered financial misconduct during the divorce process, but many partners will still attempt to conceal information. To protect yourself, make sure that you have gathered everything you need.

Start a Cash Flow Analysis

Many who are going through a divorce feel like much of their life is out of their control. Take control of your situation by looking at your individual income and expenses to get a sense of what you’ll be facing after the divorce. Track your income and living expenses and create a monthly budget that will fit your personal situation. If you are planning to sell your home and move to your own space, knowing exactly what your cash flow is will help you make the right decisions going forward.

Don’t Make Decisions Based on Emotions

Divorce is emotional, but making emotional decisions when it comes to dividing assets is never a good idea. If you go into a divorce intending to punish the other partner or to “win”, you will typically end up worse off in a process that will be extended. If you are having a hard time separating the emotional piece of the divorce from the practical, consider compartmentalizing. Look to your attorney, your financial professionals, and others who are not emotionally impacted by your divorce to guide you through the financial aspects, and save your emotional needs for friends, family, and others who you can trust to get you through the process. Remember the big picture – you want to end the marriage with a fresh start heading toward the next phase in your life.

Make Sure You Have a Capable Team of Professionals

Make sure you have the right lawyer, as well as financial professionals and tax professionals to give you advice during the process. Sometimes you will need to open a separate bank account right away, sometimes moving money out of joint accounts too soon can be a problem. There are often tax implications to property division, and making the right move at the right time is necessary to keep as much of the value of the assets as possible. Trust the professionals you’ve hired and follow their advice.

You don’t want to let financial misconduct during your divorce process impact your life going forward. Look to the right professionals, especially your experienced divorce attorney and your financial advisors, to guide you in making the right decisions. Think about what matters most to you and focus your attention on what is most valuable to keep your head clear. With the right path, you can protect yourself and your financial future. If you’re going through a divorce and need an experienced, trusted divorce attorney, contact my office right away.