People often stay in unhappy marriages because they want to protect their assets. They know divorce is expensive, and they could stand to lose quite a bit. Those who follow through with a divorce come out somewhat poorer. Both sides should take an equal hit, but that doesn’t always happen. How can a person ensure they and their soon-to-be former spouse split the assets fairly?
Conduct an Inventory
Fuller Willingham and Carter, LLC recommends couples conduct an inventory of their assets and debts, as many people do not realize what they have and what they owe. When conducting this inventory, couples must consider their savings, credit card bills, retirement accounts, and college funds for children. Both parties need to know the total of what is owned and what is owed.
Transparency
Both parties must be transparent about disclosing their assets and debts. Hiding assets and debts can lead to a contentious dissolution of the marriage. In addition, couples may pay more in legal fees, and the party trying to hide assets and debts could lose credibility in the eyes of the judge.
Separate Funds
Each partner should have their own checking and savings account when they divorce. Maintaining separate accounts ensures the other party won’t withdraw all funds from an account. Some worry that telling their spouse they want separate accounts will lead to the spouse withdrawing all funds from any joint accounts they hold. Withdraw half of the funds before telling them about this decision, and be transparent in all financial dealings. Don’t wait days or weeks to tell them about this withdrawal. Do so promptly to prevent problems.
Establish an Emergency Fund
Start an emergency fund immediately. This fund should only be accessible by the account holder. Financial experts recommend that each party in a marriage have a separate emergency fund. They should share information about this fund with their significant other but keep the accounts separate. People can never know what will happen, so it’s best to have separate funds even if you maintain a joint account.
Work With Professionals
Men and women going through a divorce should hire professionals to help them. Most people hire a divorce attorney but may also need a mediator, financial advisor, tax accountant, and real estate professional. A person can never have too much advice when going through a divorce. They need information to make decisions that will benefit them in the future. While a person might be hesitant to spend money because they’re going through a divorce, doing so can provide them with a better financial future, so it is best to spend the funds.
Paperwork
Individuals going through a divorce should have separate attorneys review all paperwork. Each attorney will ensure that the paperwork is filled out correctly and that mistakes that could affect either party’s financial future will not be made. Couples may choose to fill out this paperwork without the help of an attorney and then request each attorney review the documents when they are complete. Doing so is one way to save money if the parties feel confident they know what steps to take when completing these documents.
Insurance
When a spouse is ordered to pay alimony or child support, the partner receiving these funds must ensure that the spouse has insurance to cover the payments if something happens to them. At a minimum, they need life insurance. However, it’s also best to request disability insurance to protect all parties. In addition, both parties should change the beneficiaries on their life insurance policies if the soon-to-be former spouse is named a beneficiary on one or more of these policies.
Couples should do everything possible to split assets and debts fairly rather than going to war. Emotions play a role in any divorce, and allowing them to get the best of a person could lead to expensive legal fees and a resolution that neither party is happy with. Work with the soon-to-be former spouse to resolve the matter fairly and equitably, and both parties can walk away more satisfied with the result.
