If you and your spouse are seeking an uncontested divorce, you won’t need to do much to protect yourself financially. If both of you agree on how to divide your marital assets as well as the details involving alimony, child support, and child custody, there’s probably little reason for concern. (Having said that, it’s always advisable to consult a qualified divorce attorney to make sure your legal rights are properly addressed.)
But let’s say you and your spouse are at bitter odds with one another. You’re arguing over every detail of your settlement and things have reached the point where seeking an uncontested divorce is all but impossible. Here it’s critical that you take steps to protect yourself. If you neglect to do so and proceed on blind faith, your soon-to-be ex might take advantage of you.
Read on for several smart tips on how to protect yourself financially when going through a divorce. Even though your situation may be similar to the experiences of other divorcees, it is unique. Therefore, use those tips blow that apply to your circumstances.
#1 – Put Your 401k, IRA, And Other Retirement Accounts On Hold
Many people have some type of retirement account, such as a 401k or IRA, to which they make regular contributions. The problem here is that such accounts are often vulnerable during a divorce settlement. They may be subject to division with your ex receiving half or more of the money contained in them.
Stop putting money into these accounts. You’ll protect it from your spouse and have more income at the end of each month. Put the extra cash into a bank account that is in your name only. It may come in handy when your divorce gets underway.
#2 – Cancel Credit Cards That List Both Names
Jointly-held credit cards have been the bane of countless divorcees. Resentful ex-spouses often charge purchases to such cards with no intention of paying for them. That leaves the other person with an unpleasant choice: they can either pay off the cards – in effect, pay for their spouse’s purchases – or refuse to do so. Unfortunately, the latter option puts their credit status at risk.
Assuming you and your spouse are at odds with one another, it’s a good idea to immediately cancel the credit cards that list both of your names. Doing so without telling your future ex in advance may seem rude. But the alternative – giving him or her ample time to make large purchases – could be disastrous.
#3 – Transfer Money Held In Joint Checking And Savings Accounts
You and your spouse likely have jointly-held checking and savings accounts. Such accounts are sometimes drained by one of the parties during a contentious divorce. As a result, the other person is left with no funds with which to pay his or her monthly bills.
Once you know that you and your spouse are going to call it quits, visit your bank. Withdraw half the money held in your joint accounts and place them into an account under your name. Keep your receipts for those transactions.
After you transfer the funds, inform your spouse and your divorce attorney. You may need to explain your actions to a judge at a later date. But safeguarding the cash from your future ex will provide you with peace of mind and financial flexibility.
#4 – Start Downsizing Your Lifestyle
Go through your household budget and figure out where money is going each month. Look for items that can be cut from the budget. For example, cancel magazine and newspaper subscriptions, cable television, and family data plans. Consider cancelling your lawn and landscaping service. If you have a landline phone, cancel that service as well (most people can get by fine with their cell phones). If you have a gym membership and rarely use it, now’s the time to get rid of it.
Divorce can put enormous financial pressure on people. Cutting your expenses will give you more breathing room each month.
#5 – Make A List Of Everything You And Your Spouse Own
You and your future ex will eventually need to decide on how to split your marital property. In order to do so, you need to know what you own together. Go through your house and write down everything that has any type of value associated with it. That includes televisions, laptops, clothing, jewelry, and furniture. Document every item.
An alternative to writing everything down is to record yourself on video taking inventory throughout your home. If you use this method, make sure every item can be seen clearly on the video.
Ideally, you and your spouse will agree on all matters related to your settlement. But if you’re going through a combative divorce or you fear it might become so, take the steps above to protect yourself. Most importantly, consult an experienced divorce attorney to safeguard your rights.