Whether one-sided or mutual, the decision to end a marriage or long-term committed relationship is painful. Emotions can be heightened during this time and the many decisions that need to be made can feel overwhelming. There's custody, child and spousal support, division of assets such as houses, retirement accounts, businesses…so much to consider.
Careful thought must be given to these decisions because the “business side” of divorce is critical to your short and long-term financial success. Don’t know where to begin? These four steps can help you organize your thoughts in preparation to protect yourself, your children and your financial future.
- Hire The Right Attorney / Mediator
Do your research on attorneys who specialize in representing women. You want a divorce attorney who's reputable, has proven outcomes and has been successful in representing female clients in previous cases. Interview them, learn how they’re compensated and their areas of specialty.
- Get a Snapshot of Finances
As quickly as possible, you’ll need to understand the current state of all your financial situation. Track down all accounts, not just yours or joint accounts. Make sure you have access to them. If you don’t, this next part could get tricky.
You’ll want to log in to each account, note the balance and date, and print a current statement if possible. Do this for all asset holding accounts like checking, savings, retirement accounts. Also check account balances if you’re carrying any debt – credit cards, mortgage(s), lines of credit, etc. anything he has access to that she might not.
Does your spouse have access to accounts that you do not? If you’re unsure, start journaling things as you note them. Capture any details you recall from recent or past conversations, names mentioned, banks and accounts referenced, dates or point of time references.
- Calculate Your Expenses
Understanding your true lifestyle cost is critical. Start to identify all cost categories and amounts. Think: fixed, recurring payments or expenses such as mortgage or rent, utilities, taxes, car loan or lease, education commitments. Also think: variable expenses such as gas, other transportation, groceries, kids’ activities, memberships, subscriptions, personal care, etc. Get a level set of what you’re spending on a monthly basis
Once you understand your expenses and spending habits, don’t adjust or change anything immediately. Sit tight on making any big financial decisions just yet. A financial advisors can help you talk through your best approach.
- Partner with a Trusted Financial Advisor
While the role of an attorney is to work on your behalf to get the best possible financial settlement for you, they don’t know how the settlement fits into your greater financial plan. That’s the role of a financial advisor.
When you are making decisions related to division of assets, spousal support, etc. a financial advisor can provide context on the long-term impact those decisions will have on your financial future. The best option is to have your financial advisor partner with the attorney to guide the conversation.
A trusted financial advisor will conduct a complete financial analysis and learn more about the values that are important to you. This can be a very emotional conversation. To do their best work, an advisor will want to understand your relationship with money, what keeps you up at night, what you hope for the future and what you ultimately want for yourself and your children. As a trusted partner, your financial advisor can then help you make the best-informed decisions throughout the divorce process to position you favorably for a strong financial future.