CHECK OUT THE FIVE BEST STEPS TO TAKE FIRST…
In January we all start receiving documents that we will need for the upcoming four month tax season. Did you know that more people decide to divorce in the first four months of the year than any other season? It does make sense. The families have all gotten through the holidays. The spouses may have been giving it one last try to see if the holiday spirit would revive the relationship. Unfortunately in many cases that is not successful. As the marriage continues to unravel men and women begin to take a close look at their lives and realize they may need to prepare for a new start as the possibility of divorce is looming.
No matter the season, organizing the documents and information that support your lifestyle should be addressed and completed. Whether you pursue divorce or not, it is important to have the understanding of your financial lifestyle for your own personal future. The key is in the organization. No matter your current habits, this is an attainable undertaking.
Organize Your Financial Statements
Lifestyles vary and savings may be housed in a variety of financial institutions and investments. For some, purchasing a large three ring binder is the optimum storage vehicle for the documents. For others, electronic storage such as flash drives are more convenient. Whatever the choice, it is imperative that all documentation is stored in one location. Statements will include documentation of bank and investments such as stocks, bonds, and mutual funds. Additionally retirement accounts are important to accumulate. This may include IRA’s, 401(k)’s, 403(b)’s, fixed and variable annuities, cash value life insurance policies and pensions.
Another important financial document is of course your tax returns. Whether added to a binder or electronic storage, acquire at least 2 years and at best 5 years of prior federal and state returns. These documents are important so you can see if your spouse has been removing money without discussing it with you, and because once the divorce process begins, these assets tend to “dwindle”.
Organize Your Credit Information
Request a credit report. This reflects your credit history as well as spending habits. It also provides insight into your spouse’s spending habits on jointly held cards. The report should be reviewed for accuracy and errors corrected. This is crucial for the future ability to borrow or obtain additional credit.
Further, addition of 5 years credit card statements to your binder is prudent. If necessary, credit card companies will mail you the historical copies at no cost. This additional documentation of your marital lifestyle is helpful for planning for your post-divorce lifestyle.
Review Your Last Will & Testament
Most couples have what is called the “I Love You Will”. In those cases, each spouse is the beneficiary of the other’s assets. Once a divorce complaint is filed, in most states no changes can be made to your final documents. And if you don’t survive the divorce, your spouse may be entitled to receive assets you intended to bequeath to others.
It is important to review your future desires for this and for other associated documents such as the Medical Directive and Power of Attorney. Seriously consider whether you want the spouse you are divorcing to decide whether to administer or withhold medical treatment from you if you are unable to speak for yourself. If you are reading this article, that is highly doubtful. A consultation with an attorney to document your current wishes is strongly suggested.
Begin to Accumulate Emergency Fund
Once a divorce is initiated, assets become somewhat frozen. It is important that you are able to feel secure in knowing you will not be left in a financial hole at any point in the future. While this may not happen, it is better to be prepared than not. Open a bank account in your own name. Also open a credit card in your own name, and get the highest credit limit available to you.
Consult with Professionals that Will Help You Prepare
Many individuals do not know that it is not necessary to retain an attorney to handle a divorce from the start. There are other avenues, and one of them is to work with a financial professional who is equipped to help you organize, strategize and finalize your divorce. Of course it is important to know the laws of your state and to consult with an attorney and have counsel chosen to step into the process when necessary.
However, your first step, before any of the legalities is to organize your information and work out your financial strategy.
Latest posts by Ellen Wanamaker (see all)
- It’s Divorce Season. Are You Ready? - January 27, 2021
- Divorce Mediation Facts and How To Prepare - January 27, 2021
- 5 Divorce Mistakes That Can Cost You Lots of Money… and Sleep - January 27, 2021
- Tax Implications of Divorce Property Transfers - January 27, 2021
- Divorce Negotiation Persuasion - January 27, 2021