5 Ways to Financially Prepare Yourself for Divorce

January 9, 2014 1 Comment »
5 Ways to Financially Prepare Yourself for Divorce

No one wants to get a divorce. It can take a hit on your heart, of course, and your wallet. But it doesn’t have to spell out financial disaster for either of you. Here are five key strategies that will prepare you for a divorce, whether you’re contemplating such a change in your life or you haven’t even walked down the aisle yet.

 

1. Always clearly communicate

 

Communicating involves not just talking but listening as well. If your spouse handles most or all of the finances, then make sure you’re listening and paying attention to where the money goes. If you’re the finance manager of the marriage, share information with your spouse, and make it easy for both of you to access the accounts (do you both know all of your accounts, including log in and password information?). Doing so builds trust and makes sure neither one of you loses out if divorce happens. Ugly divorces stem from those who haven’t communicated well during the marriage, a problem that breeds mistrust and paranoia—and horrible fights.

 

2. Know the law

 

There is a lot of misinformation out there about divorce and divorce law. It’s a hot-button issue that perfectly fits into the eternal battle of the sexes. If you are getting married or if you are facing a divorce, you don’t need charged emotional rhetoric—you need facts and information. Take the time to review the laws that apply in your state, and consider meeting with an attorney to get the lowdown before moving forward. How are fault and no-fault divorces settled in your area? What can you legally do to protect yourself, and what efforts are a waste of time? If you read up ahead of time, you’ll at least know have an overview in the back of your mind of the ideal ways to set up your finances.

 

3. To prenup or not to prenup?

 

If you’re already married, this question is coming too late. But it’s a key consideration for those who tend to be conservative with their finances and want to prepare for worst-case scenarios. Prenuptial agreements are not necessarily about whether you trust your partner; think of these agreements as a way to protect oneself from the unknown—and there’s no bigger unknown than the future. On the other hand, prenuptial agreements only protect individuals’ past assets—anything acquired after marriage is not covered. So if you’re broke before marriage, don’t think a prenup is going to save you when you make your millions after the honeymoon.

 

4. Keep finances separate

 

When divorce time comes, most judges will want to look at how much each spouse brought into the marriage, and how much they took out. Separate accounts might not sound terribly romantic, but it is smart (and, honestly, do accounts ever sound romantic?). With separate accounts, you’re making it easier for the courts to determine who has brought what to the marriage, and for many judges this is the most important consideration. While many couples will have a joint banking account to manage their shared assets (like their house), they may have their own savings account on the side as well as separate credit card accounts. And their spouses know about the existence of any separate account. Nothing should be kept secret from the other person (remember Rule #1).

 

5. Protect yourself

 

When all else fails, you need legal representation. Unless you’re one yourself, only a lawyer can help you truly understand your rights, your spouse’s rights, what actions you can and cannot legally take, and what will put you in a stronger position before the divorce is final. As with your marriage, communication is key. Your lawyer can help you only as much as you’re honest. If you don’t tell this adviser everything, no matter how embarrassing it might be, there will always be a limit to how much they can help you.

 

This was a guest post by Cassy Parker of CreditDonkey.com.

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