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Six Steps to Protect Yourself Financially When Getting a Divorce

— August 15, 2019

Protecting yourself financially during a divorce is one way of mitigating the damage already being done by the process.

Unfortunately, marital bliss is not reserved for every single couple. Many newlyweds divorce days after the honeymoon. Such breakups and subsequent divorces can turn ugly, especially in terms of finances. If couples didn’t agree early on about the finances, it is highly unlike they will reach a settlement now that they are in a feud. That is why it is wise for both spouses to actively protect their financial interests when getting a divorce.

Two home budgets

You probably grew up in a family that had a single home budget. There was not much difference if your mum or dad gave you lunch money because they had one piggy bank. However, your parents were probably married for years before they decided to conjoin their income. In the beginning, however, it is smarter to keep separate home budgets. Otherwise, a divorce will leave a financial mess and you won’t know whose money it is in your joint bank account. The argument over this once joint budget can go for years because it is impossible to determine individual shares. Having two separate accounts for an initial couple of years prevents such a scenario from occurring.

Cancelling the card before the divorce

If you do make the foolish decision of opening a joint account, you have to be ready to react before your dispute reaches the solicitor’s office. In many cases, an infuriated spouse can use the credit card to spend as much as possible, hurting you both emotionally and financially. Once it becomes clear that getting a divorce is merely a matter of time, you should immediately close the joint account or prohibit access to your bank account. This way, you will effectively prevent a shopaholic form of revenge, which is quite common in cases when one partner earns substantially more than the other.

A credit report is vital

Another useful tool when your case hits the court is a credit report. This way, you will be able to account for each dollar spent and show who the spendthrift in the family is. Whether it’s a judge, a solicitor, a mediator handling your case, they will know who has been spending the most of the money and for which purposes. Like the cancellation of the credit card, the credit report should be gotten before the divorce and before the account is closed. In general, you should seek to compile as much evidence as possible that will help you come out on top in case of a legal dispute.

Lawyers and prenups

The reason why there are so many lawyers in our society is the fact that there are so many laws that it is impossible for an individual or an entire firm to specialize in all of them. There are criminal lawyers, the infamous “ambulance chasers,” and the one you need the most, family lawyers. Law firms like Doolan Wagner are versed in family law and they can help you get through the divorce without overpaying. However, unless you have both signed a prenuptial agreement, you have to be prepared for the possibility of losing some money because you never know how good the lawyers your ex-spouse hires are. That is why you shouldn’t save money when hiring your legal councillors because they can help you with prenups as well.

However, the strongest argument against signing prenup is the belief that it kills all the romance and is an open display of distrust between spouses. If both of you are responsible adults, then signing a prenuptial agreement is more of a sign of the presence of trust and love for one another. The possibility of an early divorce looms over all newlyweds, regardless of how much they are in love and trust each other.

Apart from property issues and possible custody over the (yet to come) children, a typical prenup deals with the finances of future spouses. You have the possibility to set in writing who will get most of the money in case of a divorce, thus avoiding long court trials and lawyer fees. In fact, it is much cheaper to hire family lawyers to draft a prenup agreement than to hire them later on when the divorce becomes ugly.

Alimony and taxes

Woman in black pants sitting on floor with tax paperwork and a calculator; image by Kelly Sikkema, via
Woman in black pants sitting on floor with tax paperwork and a calculator; image by Kelly Sikkema, via

If you two have a child at the time of the divorce, then child support is a mandatory cost. However, spousal support is somewhat different in the sense that for the person paying, this alimony is tax-deductible and for the spouse receiving it, this sum is taxable. Often couples agree on alimony right away but once they realize the tax implications, the bickering intensifies. If you’re the one paying the alimony, be aware that the amount you give will be lower at the end of the fiscal years. On the other side, if you are set to receive spousal support, then account for the tax deduction, so as not to be over-surprised when a lower amount is paid to you.

A double sellout

The actual person filing for divorce is basically the one who didn’t want to work and resolve issues. If you are the person being “sold out,” metaphorically speaking, then you can go all the way. If your spouse leaves the house but leaves behind stuff after them which they will not be coming back to claim, organize a garage sellout. The price tag should read low to ensure everything is sold out in a single day. This way, you get extra money and you get rid of all the material possessions that might remind you of your ex-lover. Unlike hiring good family lawyers, this might not be the most rational move you’ll make after the divorce but surprisingly enough, it is financially profitable.

If you stick to the six steps listed here, a possible divorce should not leave you penniless. Of course, you will still be emotionally devastated but with enough money to soak your sorrow in luxurious presents you can buy yourself. Don’t forget that the most effective measures to prevent a post-marital bankruptcy need to be taken even before you two are married.

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