At the start of every divorce, a couple’s financial picture can range anywhere from tidy to unorganized to altogether unknown. Even when finances are in order, couples, whether inadvertently or by their own hand, take steps that ultimately undo their past hard work, causing themselves further problems.
Regardless of where you fall on the spectrum, it’s important to know before commencing the divorce process what you can do to clean up — and keep clean — your finances.
Here are seven issues to pay close attention to as you ready your finances for divorce.
7 Ways To Help You Clean Up Your Finances For Divorce Now
Keep Copious Records
Even if you never did before, today’s a perfect time to start. Your lawyer will need to know how much money is coming in and going out, right down to that coffee run to Starbucks you made yesterday morning. You’d be surprised how quickly small purchases can add up, sometimes to thousands of dollars each year, especially if you’re spending cash — a dollar here, three dollars there.
Pay close attention, too, to expenses that don’t show up in a typical month, like repairs. They count, and often for a lot.
As for that second job or side hustle you have, which can change from month to month, and seems like “bonus” money? It also counts, so be sure to include it.
If you have an investment portfolio, it’s also crucial to keep a record of all of the different asset classes and platforms that you’ve invested in. Such as records of any stocks that you’ve purchased and sold and any cryptocurrencies and NFTs that you’ve brought and sold online. As any profit which you make from your investments will be deemed income and will need to be accounted for if you choose to go through a divorce. As if you divorce, you’ll either need to settle out of court or to go through court proceedings to decide how all of your shared assets will be split.
While you may be concerned about having to share details about your personal investments during your divorce proceedings, if you can prove that you spent more of your disposable income on investing for your family’s financial future than your partner, the judge may award you more than 50% of your shared assets. So it definitely pays to be transparent when it comes to sharing details of your investment portfolio. Particularly if your spouse did not spend a portion of their disposable income on obtaining financial assets and instead spent the majority of their money on luxury items such as clothes and social events.
To your soon-to-be-ex, the person who’s making your life miserable? Yes, especially him or her. Your spouse will probably not like very much that you’re keeping tabs on their spending or asking for clarification about why they made certain expenditures. An attitude or nasty tone can only make matters worse.
The same goes for the folks on the other end of the phone at the utility company, bank, and insurance carrier. They can help you with your fact-finding and sometimes offer you information that you won’t see on a statement. Be level-headed and polite, not the crazy recorded subject who trainees listen to and learn from in class. Remember, you can catch more flies with honey than with vinegar.
It’s well worth keeping in mind that if you are cordial and civil when you deal with your former partner, they will be far less likely to become emotionally upset and to try and fight you for the majority of your shared assets. So if you want to walk away from your divorce with your fair share of assets, ensure to speak to your ex-partner and their legal representative in a pleasant manner.
Collect Your Financial Documents
This task can be daunting, especially if you aren’t the organized type or have been in the past. Fortunately for you, financial records group nicely into neat categories. If you’re systematic in your search, you should be able to locate most of the documents you need, as well as produce them.
Your lawyer will be able to subpoena the rest during the discovery phase of your divorce. But the more you can find now, the easier this will be later on in the process.
Thankfully getting copies of your financial documents these days is a whole lot easier than it used to be, as you’ll be able to access most of your financial accounts, such as your bank accounts, online. For example, if you log into your personal online bank account or your business account, you will be able to download financial statements for any period of time which you specify. Which can be incredibly handy when you’re trying to obtain all of your financial documents.
Stick To Your Usual Pattern Of Spending & Saving
That means don’t make any big purchases you wouldn’t make ordinarily.
As tempting as it may be, refrain from tapping into your savings account to buy that diamond bracelet you always wanted or fancy sports car. Apart from making you look bad, the court will take steps to make the aggrieved party whole again, and you may not like how they do it.
For example, if you are unable to settle your divorce through mediation and end up in court if the presiding judge decides to split your shared assets 50/50, they may deduct any unusual spending which they see in your financial documents from the amount which you are awarded. So if you splash out on purchasing an extravagant item such as a new car or a boat that you don’t need or really want, in the months leading up to your divorce, it’s likely that you’ll still end up paying for your impulse purchase.
Remember that divorce court judges have seen it all and that trying to manipulate a judge into giving you more than your fair share of money and assets, is highly unlikely to work.
If you check your shared accounts and find that your spouse has started spending large amounts of money, that is unusual, it’s well worth highlighting these transactions so that your lawyer will be able to point them out to the judge.
Don’t Make Any Significant Changes To Your Financial Picture
Think Billy Joel and “Don’t go changing” signers on bank accounts, beneficiaries, and whatever else has been part of the status quo.
Again, not only will it create ill-will with your spouse; it will do the same with the court. You’re in the spotlight now, so start acting like a boy- or girl scout and behave honorably and honestly, even if your spouse isn’t.
There’s also a high chance that your soon-to-be ex-spouse’s lawyer will bring any significant changes which you’ve made to your financial accounts or insurance policies to the judge’s attention during your court proceedings. So if you thought that you can hide sudden changes such as your listed beneficiaries on your investment policies from the judge presiding over your case, think again!
Instead, wait until your divorce has been finalized and you have received your divorce decree in order to make any quick changes to the individuals who are listed as your beneficiaries on your accounts, to avoid being penalized during your divorce proceedings. Especially if you and your former partner share a bank account or multiple bank accounts and you try to get their name taken off your joint account before your divorce has been formalized.
Beware Of What You Read Or Hear
You’ve made the life-changing decision to divorce. Naturally, you’re going to start breaking the news to people you know, and some you don’t.
Though there will be many differences between the folks you speak with, one thing will become abundantly clear: most will offer you their two cents, even when you haven’t asked for it. That’s especially true for conversations about money, which has a way of getting people’s back up.
The same goes for what you read online. It should go without saying that not every resource is reputable or accurate. So take advice that isn’t coming from someone you trust with a grain of salt.
Ask For Help
There’s no shame in needing guidance through the divorce process. The good news is you don’t have to go it alone. A strong, capable legal team can help you through your divorce so that it moves along quickly and economically. And you come out of it in a better position both financially and emotionally than you were before.
If you are looking into getting a divorce, you want someone who is going to be on your side. Connect with us at Charlotte Christian Law Firm by phone at (256) 769-0508, or online at charlottechristianlaw.com to find an attorney that will go to bat for you both in and out of court. We will advocate for you.