Divorce is all too common an experience and one that, if you are not prepared, can lead to financial catastrophe. Inthe midst of all the hurt, confusion, and logistical hurdles, divorce raises the possibility of literally cutting your personal financial resources in half.
So, whether this day has been long in coming or you’ve been suddenly blindsided, there are at least 7 things you must do quickly to financially prepare for the process that is coming.
1. Collect Your Financial Records and Make Copies and Backups
Whenever the law is involved, documentation is your best resource. Bank statements, credit card statements, tax returns, retirement account balances, mortgage information, even receipts for up to five years can all be important and should be collected in a secure location and backed up either digitally or in hard copy in a second secure location like a bank box.
2. Get a Credit Report
Along with other documentation, work to collect a copy of your credit report and look carefully for any debt that you don’t recognize. Divorce is hard enough on your finances already, the last thing you need is to end up with liability that the other party was originally responsible for.
3. Retain Professional Help
Divorce is always costly, but moving forward without expert help can end up costing you far more during proceedings. With so much going on, so much at stake, and so many hard emotions swirling through your mind, it is crucial that you work with professionals who can think clearly and make sure your rights are respected at every stage of the divorce. These professionals should include a divorce attorney, an experienced counselor or therapist, and a professional, compassionate financial advisor like those of us at Heritage Financial Strategies.
4. Inventory your Personal / Marital Property
In Arizona all assets and debts a couple accumulates during marriage are considered “community” property owned equally by both individuals. This property will be divided between both parties in a way that, under law, must be approximately equal. However, property one spouse owned alone before the marriage, or acquired (solely) by gift or inheritance during the marriage, is that spouse’s separate property if they can prove such with financial records or other documents. One way to quickly create a record of items in your home or other property is to take a slow walk through your home with your cell phone, recording the contents of each room and spending extra time on high value items.
5. Change Your Beneficiaries / Will
When your divorce starts you want to change your Will or Living Will to make sure that your spouse won’t be making medical decisions on your behalf and won’t be the sole beneficiary if you pass away.
6. Open Solo Financial Accounts
If you don’t already have a bank account or credit cards in your own name, open them now. This will give you a safe place to put away your own income and build (or rebuild) personal credit.
7. Open a Post Office Box
Divorce can be a contentious process and often represents a breakdown of trust and goodwill between the two parties. This makes it important to protect the flow of information between you and your team of divorce professionals. Because confidential letters sent to your home may be intercepted or ‘mysteriously’ lost, a PO Box can be a good, secure solution. All mail sent to your box will remain at the post office in a secure container.
So call us at (480) 397-1184 to schedule an appointment with a Heritage Financial Strategies advisor who can help you during this difficult time.