Did you know that January is usually a busy time of the year due to divorces in the family attorney world? Unfortunately, it’s true – many people considering divorce wait until January to get through the holidays first. This is especially true if children are involved – parents want to avoid soiling Christmas with the stress of knowing their parents are getting divorced.
If divorce is in the cards for you this January, here are a few tips to help you prepare.
Get Your Financial Information Together
When you buy a house, one of the main things you have to do is pull all of your financial information together for your mortgage lender. When you’re getting divorced, it’s the same way.
You want to collect your financial information, so you have it all readily available. A significant part of the divorce process is dividing financial assets. Having it all together will make the process easier later.
What kind of information should you get?
- Bank account statements
- Tax returns
- Credit card statements
- Retirement account statements
- Stocks and mutual funds
- Physical assets such as precious metal coins, if applicable
These will all come into play as the divorce gets pushed through.
Have Liquid Funds Available
When referring to assets, liquidity refers to how easy it is for an asset to be converted into cash without affecting its market price.
For example, a checking account has a lot of liquidity. Therefore, pulling money out is straightforward so you can use it for anything.
Real estate is not liquid. Selling a home to convert your equity into cash takes a while. Sure, you can sell the house quickly for less than the market price, but that’s not ideal.
When you’re getting ready for a divorce, you want to ensure that liquid funds are available. Especially if you’ve always had separate bank accounts and your spouse has managed most of the money. You want to avoid getting into a situation where the divorce is going through, and you end up without the money you need to live! You may find yourself looking for a new place to live, which generally involves having cash in the bank for a deposit and the first month’s rent.
Create Your Budget
This can be difficult if you don’t know how much alimony or child support to expect from your soon-to-be ex. But you can still work on developing a budget with what you know. Make sure you include the biggest buckets here:
- Your income
- Car payment
Budgets aren’t fun and can change over time due to circumstance changes, but having anything is better than just “winging it.”
Change Passwords and Get Your Own Accounts
It’s generally not a good idea to keep the same online accounts and passwords if your ex-spouse knows them! Hopefully, they wouldn’t do anything to harm you or steal from you, but it’s not worth taking the risk. If you have joint accounts, such as bank accounts, make sure you set up your own individual ones. If they know your social media password, change it!
Lastly, we recommend updating paperwork that may list your spouse as a beneficiary. For example, you should update your will and estate plan so your spouse is omitted (assuming that’s what you’d want.) Unfortunately, sometimes estate plans aren’t updated, and many assets go to someone’s ex-spouse!
January is Divorce Month; unfortunately, a lot goes into preparing for divorce. Send us an email or call at 714.456.9118, and we’ll make sure you dot your i’s and cross your t’s, so nothing gets missed.