By Susan M. Keenan
Divorces can be financially crippling to the couple involved depending on their financial resources in the first place. Knowing what to do in the first place and then doing it are two important steps that you can take to protect yourself financially.
During a marriage, both individuals should participate in filing taxes so that they have a clear idea of what assets are available. Don’t stick your head in the sand, thinking that it will never happen to you. Approximately fifty per cent of all marriages end up in divorce these days, so a little bit of harmless knowledge might be integral to your financial status.
Additionally, both parties should be aware of the level of debt that exists during the marriage. Taking an integral part in the finances during a marriage allows the individual to be actively included in the financial distribution of assets during the dissolution of the marriage. If you aren’t aware of what the two of you jointly own, how can you possibly know what it is that you want for your share of the marital assets?
Realize, first and foremost, that even if the divorce is an amicable one, plenty of room exists for inadvertent financial errors, as well as for intended ones. Secondly, realize that while the couple involved and their legal representation should determine the division of marital property, it isn’t always a fair distribution. Family members and friends may advise one or the other of you to take the other one to the cleaners or to take as much as you possibly can away from the marriage financially.
Follow these simple guidelines to help keep the financial end of things clear cut once a divorce has been set in motion.
In the beginning stages:
- Make a list of all current debts, investments, family income, and assets. This includes all stocks, CDs, bank accounts, credit card accounts, and loans.
- Keep records of any changes to existing accounts or the opening of any new accounts.
- Inform the necessary people, such as creditors of your impending marital status.
- Cancel any joint accounts, including bank accounts and credit cards. Bank accounts should be canceled with both parties involved, not individually.
- Acquire a credit report to verify what accounts you have that are open and need to be closed.
- Pay off as much of your joint debt with joint funds. In particular, attempt to pay off credit card balance, store card balances, and small loans. These accounts cannot be canceled until the debt has been paid.
- Open individual accounts for savings, checking, and credit.
In the final stages and after the divorce:
- Change the beneficiary on any life insurance policies, retirement plans, investment plans, and bank accounts.
- Change the names on the assets to reflect new ownership. This includes any cars, deeds, stocks, or bonds.
- Update your will. Change the terms and beneficiaries of any existing wills as necessary.
- Acquire a credit report to verify that your ex-spouse is not charging debt in your name with a forgotten account.