Many couples fight about money. If these fights happen at least once a week, however, that couple has a 30% greater chance of getting a divorce. The worst part? Even a divorce won’t necessarily put an end to fights about money.
Here’s a rundown of many common divorce-related financial issues, as well as some effective strategies:
Ideally, your divorce is amicable. If you can sit in the same room with your spouse and have a productive conversation, that’s great. You’ll have a much easier time dealing with the finances.
You and your spouse both need to know:
The more you can get everything “out on the table,” the better. If you two have no debts, no minor children and are willing to divide assets on your own, your divorce can be a smooth process which won’t involve a lot of legal wrangling.
Unfortunately, not every divorce is amicable. If your divorce is contentious, you may not have access to the financial information you need. Even worse, your spouse could potentially be hiding assets or debts from you. In certain cases, you might still be responsible for debts your spouse created, even if you were completely unaware those debts existed!
In most cases, you’ll want to hire a divorce attorney. The average cost of a divorce attorney is about $250 an hour, but it can be money well spent. Just one overlooked account can have big consequences down the line. Your ex-spouse could potentially create debt you’ll be responsible for, even after the divorce.
A divorce attorney will ensure everything is properly handled – so a divorce attorney is a good idea even if the divorce is amicable. If the divorce is contentious, a divorce attorney is an even better idea. You want to protect your assets, and avoid any debts you weren’t aware of.
You’ll have enough on your mind during a divorce. An attorney will help keep you from letting your emotions cloud your decision making.
If you need help determining financial information related to your soon-to-be-ex, you might want to hire a forensic accountant. This is a specialist who is able to find hidden and unreported assets, and otherwise uncover the true financial picture.
Did either you or your spouse create a business while you were together? Or did a business either of you own increase in value during your marriage? Your spouse might be entitled to some of those profits. Your business will need to be professionally evaluated.
Of course, the less time you have to spend in court, the quicker you can finalize the divorce. If possible, you want to find a solution to any joint debt without involving the court. Joint debt can be any shared debt, but is typically credit card debt.
Many married couples are co-signers on a credit card. How the debt is distributed in a divorce depends on state laws and other factors. Sometimes, a divorced couple will sell joint assets (such as a house) and use that money to pay off joint debts.
Once the divorce process starts, it’s usually a good idea to cancel any joint credit cards. This just makes things easier, since nobody is able to accumulate new charges going forward. If you feel your spouse might run up credit card debt simply to be vindictive, cancel your card as soon as possible. If the divorce isn’t that contentious, you might want to warn your spouse that the cards will be canceled. There’s no need to cause problems if you don’t need to.
Laws regarding who gets the house, the car, the business and other assets vary state to state. Generally, divorce experts recommend that the couple physically separate during a divorce. That is, don’t try to live in the same house until asset distribution is finalized. Don’t worry if you move out, however. The occupant of the house during the divorce proceeds isn’t necessarily the person awarded the house by the courts.
Nobody wants to drag out a divorce. The best way to wrap things up quickly is to figure out your assets, hire a professional attorney, and be open to compromise. While money is certainly a contentious issue, not every divorce has to be a financial nightmare. There’s a way to deal with your finances during a divorce which allows everybody to win.