While each of us has very specific and different financial pictures, there are certain steps we can all take to help protect our financial futures and assets prior to filing for divorce. Planning and taking certain actions prior to divorce can be especially important for spouses who have historically taken less control over marital finances and those who completely relinquished all marital financial control to the other spouse during periods of trust. However, the divorce planning steps outlined here are also important for spouses who have been responsible for and taken control of marital finances. These steps can help alleviate concerns of financial misconduct and can help manage legal fees by reducing the amount of suspicion on the part of opposing counsel.
1.) The most important of these divorce planning steps is to identify and take inventory of your income, assets and liabilities. This includes making a determination as to whether the asset or debt is marital or individual. Close rarely used or unused joint accounts.
2.) Related to step one is to begin collecting documentation related to your finances. Request and obtain at least one year of statements for all joint and individual accounts including checking, savings, retirement and investment as well as credit card statement and life insurance documentation. Keep both electronic and hard copies. Document and secure all online account passwords. Copy your check registers and obtain copies your tax returns for the past three years.
3.) Open your own individual checking and savings account and secure some liquid assets without interfering with the payment of regular monthly marital expenses.
4.) If you have extra marital funds, you might choose to pay off marital debts before accumulating too much cash in joint checking or savings accounts.
5.) Understand and establish evidence of your income. Income can come from many sources. These all need to be identified. If you are a W-2 wage earner, obtain six months-worth of pay stubs. Secure evidence of any bonuses and commissions earned. If you are an independent contractor, obtain copies of evidence of six months-worth of income documentation. If you have income from other sources like investments or trusts, you should obtain copies of documentation of that income. Avoid making major employment changes or decisions immediately before or after filing for divorce.
6.) Take photos and get appraisals for personal property of value regardless of whether those assets are marital or individually owned. This could include art, antiques, jewelry and vehicles. Secure any individually owned personal property of value.
7.) If you and your spouse own a business together, make sure you understand the nature of your ownership. For example, if you own an LLC, get copies of the Certificate or Organization and Operating Agreement. If you own a corporation together, get copies of all the corporate records. And, if you are in a partnership arrangement, obtain copies of the partnership agreement.
8.) Determine the county in which you will file for divorce and then research divorce attorneys who regularly conduct business in that county. You do not need to hire the most expensive attorney to obtain great legal services. You need to hire the right lawyer for your circumstances.
Notice: Given the very fact specific nature of each divorce situation, seeking the advice of legal counsel is recommended before making changes to your marital financial picture. Not all of the steps identified herein may be appropriate for your situation.