Important Financial Advice During Divorce to consider

 

Financial Advice During Divorce

Many people go into a divorce after watching too many movies and thinking that a divorce happens quickly.  The truth is that a divorce often takes a year or more to be finalized.

A lot can happen to a person in a year.  Kids change schools. Parents get sick. Salaries change.  All the while, the two spouses are trying to live independently, but are still legally bound together.  

Some spouses will stay separated for a long period of time, but for most people being separated but not divorced is a painful time.  

A separated person cannot remarry and may struggle to establish sound financial footing.

So, here is some financial advice during divorce.  

Do not take assets early

As a general matter, everything you own as a couple has to be split up in the divorce, usually about equally.  You have to both continue to support the children and provide for your own health and well being.

But in most situations, a separated spouse is not allowed to spend money on extravagant purchases beyond the normal cost of living while a divorce is pending.  

Sometimes this rule is established in a statute, sometimes it is ordered by a judge, and other times it is just enforced in the final settlement.  Either way, it makes good sense to avoid big spending unless it is cleared by a lawyer. It is best to think of all assets as jointly owned until the divorce is final.

Do not take assets early

Consider a formal separation agreement

In complicated financial situations, it may be best for the two spouses to hammer out a formal agreement about how the money will be managed until the divorce is final.  This is more common in some states than others.

A separation agreement can also be anything from an informal checklist to a formal document drafted by attorneys and filed with a court.  

A temporary separation agreement will cover things like who will pay certain bills and debts during the separation.  Other separation agreements are more permanent and address most everything that will come up in the divorce.  A separation agreement could work out property division, child custody, and child support.  

This separation agreement can often be converted into a divorce settlement after any required divorce waiting period runs out.  

Plan for post-divorce life

A divorced person faces a lot of changes.  They no longer have a partner that will help with income and household chores.  

A sole breadwinner of a family may now be paying for two houses, or a stay-at-home parent may have to work outside the home for the first time.  

There is a lot to think about.  

A good first step is getting on a budget.  To do that, a person must think about where they want to live and what kind of lifestyle they want (or can afford).  

Income is the other half of the equation.  A newly-divorced person might want to change jobs.  Or he or she might have more time to work if the kids will be spending half the time with the ex-spouse.  The income change can dictate a spending change.

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