The prospect of divorce can feel overwhelming. Is there still a chance of reconciling? What will happen to the kids? How will you make ends meet? That awkward “tween” time while you are considering your options but before the paperwork has been filed is a critical stretch. In the midst of uncertainty and stress, is easy to lose sight of non-urgent administrative tasks that could make your path to divorce (and ultimately your new life on the other side) easier.
Here is a list of 5 actions that you need to consider.
1. Gather important documents
A complete inventory of important financial and legal documents will make the divorce process easier. There is enormous value in having bank account balances and credit card activity at your fingertips. Here is a sample list of paperwork you may need.
- Recent bank account statements
- Investment account statements, including 401(k) accounts
- Recent property valuation statements or tax bills
- Credit card statements
A credit report is a great place to begin, as it will list all mortgages, car loans, credit cards and lines of credit. Having one report that covers it all can save you time and serve as an early warning if your spouse has been running up debt balances you are not aware of.
If the tone of the upcoming separation is amicable, gathering those documents into a binder at home may be sufficient. If the relationship is getting antagonistic and you are anticipating a fight, store sensitive documents in a bank deposit box or in a professional’s office.
2. Keep track of the family budget
Family spending records will serve as a useful starting point for your post-divorce finances. This does not mean that your single-life budget will be exactly 50% of your current budget, but it will at least provide you with key categories and help you make sure you don’t miss anything. From your mortgage payment to health insurance and kids’ activities, document it all.
3. Open a credit card in your own name
In your future single life, you will need stand-alone credit history and access to emergency financing. Open a credit card in your own name and begin to use it for small purchases. During the divorce, the card will serve as your safety net to cover daily expenses. It can also help pay for an emergency tow or a dentist visit while you are sorting out your joint accounts.
Consider opening an investment or bank account in your own name, as well. Apps like Betterment and Acorns can be a good way to save over time and an alternative to a traditional bank account, but keep in mind that they are not FDIC-insured.
4. Open a PO box in your name
Even in the case of a collaborative divorce, there is some mail you may want to keep confidential. That may include correspondence with your attorney, as well as credit card and bank account statements. Be sure to create a new routine for checking your PO box frequently so that you do not miss an important message.
5. Ramp up the savings in your account
You may already have some personal reserves that can be used to cover your attorney’s fees, your collaborative team, as well as other costs associated with the divorce. As tempting as it may be to buy yourself something nice as a way of getting your mind off the daily stress of your pre-divorce life, resist it and save instead.
In a volatile situation that involves abuse or anger, a spouse who controls the finances can cut your access to your joint funds. That puts you at a serious disadvantage for hiring a team to represent you, and can even force you to sign a divorce agreement that is not fair. The more resources you have in your own name, the more confident you will be.
Your pre-divorce action list
If you and your spouse are considering a divorce in 2018, find the time to lay the administrative groundwork now. Begin by creating a complete inventory of all bank and credit card accounts. Open a credit card in your own name, as well as a PO box for confidential mail. Get clarity on your current budget, and make an effort to save more.
Finally, if there are valuables in the house, use a home insurance app like Encircle to document them. Technology can make your task easier by allowing you to take a picture of the room, add valuables one at a time, and even enter model and serial numbers for easy reference and tracking.
These tasks may seem daunting, especially if you are experiencing a lot of stress, pressure, and uncertainty. However, work your way through this checklist, and you will feel more in control. By being prepared and well-informed, you can create a better chance of emerging from the divorce on solid financial ground.