Preparing Financially

Preparing For the Financial Aspects Of Your Divorce

Money can't buy you true love.

It does however put you in a good bargaining position.

Getting Separated and Divorced is All About CHANGE

                                                                                               

The changes forced upon everyone by divorce are disconcerting, confusing, anxiety provoking and downright painful. But don’t get lost there. It is an ideal time to focus on your future. How do you want to live?  

It is something many of us cease to think about as we become absorbed in daily necessities. If you choose to harness yourself to the positive side of change, you might find that you have more choices than you used to think, and you can exercise some control over the kinds of change which will take place.

The Economics of Divorce are Usually Disheartening

If you are forced to change your lifestyle for cost reasons, what will you choose to change? What is most important to you?  It may turn out, after some honest self examination, that you don’t need the things you pay for. If so, rather than bemoaning your bad luck, you will realize that the things you really value haven’t changed. This way of thinking ia a very quick and simple way, totally within your control, to improve the experience of divorce.                                                                                    

Do You Know What You Spend? 

Are you worried about your expenses when you don’t know what they are? Easing the pressure is within your own grasp? Opportunity knocks. Learn about your financial world. How much do I spend? How much do I need? If push came to shove, could I survive? Try and put some reality around the fears blown out of proportion by the unknown. Are there other ways you could generate money, so you don’t have to depend so totally on someone else?

                                                                                          

If money didn’t buy you love, what will? Do you care?

When is it a Good Time to Start?

Probably a month ago. So the best time is as soon as you can gather your wits together and begin. Ideally, that took place before the marriage and continued throughout the marriage.  If not, either learn where the financial information is stored, or ask for help.

 

                                                  

 

If you don’t use a computer-learn. Take a course, go cold turkey, or get help.

 

Nothing causes more expensive and distorted than disorganized or hard to find financial information and documents. Your lawyer cannot solve that problem. You can. You need to know the contours of the family purse.

 

Knowledge is the vehicle to your comfort. Lack of knowledge is a vehicle to your anxiety, anger and the vague sense of discomfort which inevitably accompanies not even knowing what you don’t know.

Have a Consistent Format

To help in that task, I have included what I would describe as a fairly typical “Information” sheet and “Financial Forms” which have most of the relevant information typically used by lawyers specializing in family law.  Your lawyer is likely to have a form tailored to his or her requirements. The purpose of this exercise is not to replace their standard format. The purpose is to let you see for yourself how much you really know about your family’s finances.

A Little Humor for Perspective

Actually though, we have a pretty good budget worked out.

  • 30 % for food and clothing;
  • 30 % for the house;
  • 30 % for cars/insurance;
  • 15 % for miscellaneous and
  • 10 % for medical costs.
  • The rest I spend foolishly

Prepare From the Beginning

Forewarned, as they say, is forearmed. When you decide to consult a lawyer, you can mail, e-mail, fax or deliver documents in advance.  Make an itemized list of the documents you have reviewed. Not all need be taken to an initial consultation. Your own knowledge, together with this organized information, will make the time spent in a consultation far more efficient. Here' a good article to consider

Seven Financial Mistakes Not to Make.....

Analyze Your Needs—Do a Budget

Review your current bills, cancelled checks, credit card statements and any other records which show your past spending history.

                                                                  

Lifestyle Decisions

A budget is a statement of what you believe is needed for you to live according to some standard of living. It could be one to which you feel entitled because (1) it is consistent with what you have become accustomed to during the marriage or (2) it is one you believe you can afford with limited  financial assistance from your spouse. Typically, the combined expenses of yourself and your spouse during a period of separation will be greater than they were when there was one household. There may not be enough cash flow to enable both spouses to continue living according to the lifestyle established during their marriage. Or, the marital lifestyle may have been “on the edge”, and to a point that the accumulating debt made the marital lifestyle fiscally irresponsible and short sighted.

Keep The Ship Afloat

                                                                                          

When asked to make awards of financial support during a period of separation, the Court’s objective is to “keep the ship afloat”, not necessarily to maintain lifestyle. Anticipating that, you should consider carefully how much combined cash flow is available and keep your budget as realistic and within your own control as possible. In the typical case, buying a new home or making other substantial purchases during the period of separation is problematic. There are certainly good reasons for doing so at times. But if it necessitates a monthly contribution from your spouse, and he or she does not agree, the Court may be an unreliable partner in your speculative venture.

Some Other Suggestions-Keeping Your Liabilities Under Control

Joint Investments or Other Holdings. 

If any jointly titled assets (bank accounts, brokerage accounts, home equity loan etc.) can be sold or liquidated by only one of the co-owners, you can  notify (in writing) the Bank, the broker or other financial institution that there should be no withdrawals, sales or transfers without the written approval of both parties. Make a copy for your file. Ask the broker or officer to make a note to the "on line" file on his or her company's computer system as an added safeguard.

Safe Deposit Box. 

 

Whoever gets to a jointly titled safe deposit box first has the opportunity to remove the contents.  Most banking and other such institutions do not check to to determine whether the joint owners are separated. Once a box is emptied, the contents may never be recovered. The optimum would be to obtain possession of both keys, or, if distrust prevails, to surrender both keys to an officer of the bank. At the very least, make a detailed inventory of the contents with photographs of each item. Ask an officer of the bank to verify and sign your inventory, so you will have evidence to prove whether anything was thereafter removed. In some cases, it is possible to obtain a restraining order which would prevent either spouse from gaining access to the box until there is a mutual agreement allowing one or both parties to have access.

Joint Home Equity and Other Credit Lines.

One type of joint credit that is sometimes overlooked is the “home equity” line of  credit which is secured by a lien on a residence.  Borrowing is allowed up to the maximum amount loaned by the lender. It may require only one signature to do so. If you are unclear whether there is such an open account, contact a Title Insurance company and ask that a"search" be done on the property.  Although this costs money (usually over a hundred dollars), the title company will provide you with a list of any liens against your property. If there is an open account, contact the lending institution and ask them to freeze the account. Confirm your instructions by letter and retain a copy for your records. If the equity line of credit is left open, you may be exposed to the possibility of the other signatore accessing the line and leaving you with a debt from which you may not escape.

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