Once you've made the decision to divorce, it's often not as simple as running to a lawyer and filing. Well, it could be, but in most circumstances it is wise to do some prep work before you actually file.
First and foremost, it's important to collect all relevant information and paperwork. That means pulling out the tax returns from the last five years and making copies of them. That also means figuring out your total net worth by looking at your investments, assets and liabilities. No matter how loyal a spouse has been, when divorce is on the horizon there is a chance that they may attempt to hide their income or assets.
Debts will definitely play a part in property division. It’s important to see if your spouse has amassed any amount of debt without your knowledge. It’s also important to see what debts are in both of your names as opposed to just in one person’s name; getting a joint credit report can aid in this process.
Next, it’s important to understand the tax implications of any assets you own. For example, while a 401(k) and a home might have similar value, the cost of withdrawing or maintaining them might be very different. It is especially important to work with your lawyer when it comes to these issues.
Once the divorce has gone through, it’s a good idea to set up a solid financial future. That means establishing your own credit and opening a personal bank account. Finally, it’s also important to update all insurance coverage information. You will want to make sure your ex-spouse’s name is not on your medical insurance, as well as auto and property insurance. For personal insurance policies or investments, it’s important to update the beneficiary designations. Keeping all of these steps in mind can help set you on the right path as you navigate your divorce.
Source: The Courier, “Financial items to consider during a divorce,” Byron W. Ellis, June 21, 2014