How to prepare for the financial repercussions of a divorce
For people not used to dealing with finances, divorce can be a shock
With 2015 finally here, the new year will prove to be an opportunity for many people to begin a new life. In fact, according to MarketWatch, the period between January and April tends to be the most popular time to divorce, as the end of the holidays combined with new year resolutions give people the impetus they need to finally call an end to an unhappy marriage. However, while divorce can offer important opportunities for the future, it is rarely an easy process, especially for those who go into it with little planning. Anybody considering divorce needs to prepare carefully beforehand, especially since a lack of preparation can affect vital financial issues such as alimony and property division.
New to finances?
In many marriages, one spouse typically takes care of the finances. As a result, the other spouse may be at a significant disadvantage as he or she will have little knowledge of the state of the couple’s financial affairs, according to CBS News. While full financial disclosure is required during divorce, hiding assets tends to be much easier to get away with when one spouse has typically not been involved in the couple’s finances. By hiding assets, a court is unable to fairly divide marital property or determine alimony and child support amounts, thereby exposing one spouse to a potentially risky situation.
Conversely, the person who does take care of the finances may be at a similar disadvantage but for opposite reasons. The one spouse not accustomed to the family’s finances may wrongly assume that the other spouse is lying about the couple’s financial affairs, which could lead to contentious and costly disputes.
Preparing for the long haul
People preparing for a divorce should also make sure that they have enough money set aside in case their divorce turns complicated. Couples with joint accounts and credit cards should try to separate those accounts as soon as they have decided to part ways. By doing so, they will decrease the chances for an ex-spouse to affect the other spouse’s financial condition or credit rating. Having a separate account can also provide peace of mind during the divorce.
Consulting with experts can also help ensure the process goes relatively smoothly. While many people represent themselves during divorce, the fact is that self-representation tends to take longer and often leads to an unfavorable divorce order compared to when people rely on professional legal representation. Other experts, such as financial advisers and therapists, can also help ensure that a spouse is making well-informed and rational decisions during his or her divorce.