Getting Your Finances Ready for Divorce
Making the decision to divorce is difficult, but couples who work together amicably through the process have the most successful outcomes. Preparing to separate marital finances can be an overwhelming task, but with careful planning and professional advice, each spouse can ensure that their legal rights are protected, and their financial assets and debts are distributed fairly.
Keep Track of Income and Expenses
Once you have made the decision to divorce, it is important to track your income and expenses. Keeping a record of home expenses such as utility bills, mortgage payments, food costs, clothing, entertainment, childcare expenses, home repair and maintenance bills, insurance payments, and transportation costs will help determine your debt to income ratio, which is important when establishing alimony and child support arrangements.
Projections for future expenses are also important. Children grow up and require medical care, insurance, tuition, and living expenses until they reach the age of adulthood. Costs for childcare fluctuate as well. Projections on future expenses help establish financial plans that adapt to changes in lifestyles and circumstances.
If you are the primary wage earner in the marriage, providing a record of expenses over the past years will help establish a fair rate of alimony and child support payments. If you are the spouse that earns less, you will need to establish the level of lifestyle you are accustomed to so that you are not suffering a significant decline in your quality of life post-divorce.
Child support and childcare expenses need to be documented so that the divorce lawyer, mediator, or judge responsible for establishing support payments can do so fairly. Just because one spouse earns more than another does not mean the full financial burden falls on the higher earner. The costs may be split unevenly, but it is important that each spouse can afford their share.
Locate and Organize Essential Documents
There are many documents that are an essential part of every divorce proceeding. Locating these documents and organizing them as soon as possible in the divorce process can alleviate a great deal of stress. These documents include:
- Checking account statements
- Savings account statements
- Retirement account statements
- Investment account statements
- Loan statements, such as mortgage, car loans, personal loans, and student or parent education loans
- Credit card statements
- Records of debts and assets prior to the marriage
- Records of debts and assets acquired during the marriage
- Income tax returns
Assessing Marital Assets
Marital assets include money, property, investments, and retirement funds accumulated during the marriage. Cash, savings accounts, checking accounts, IRAs, mutual funds, money market accounts, stocks, bonds, real estate, savings bonds, and 401k plans need to be divided between divorcing couples.
It is imperative to consult with a reliable financial consultant or divorce lawyer to properly assess these assets. Without their help, spouses could wind up with an unfair distribution of assets or debts. Beneficiary designations on retirement funds, insurance policies, and other inheritable assets need to be firmly established as soon as possible to ensure these benefits are distributed according to your wishes upon your death.
Bucks County Divorce Lawyers at Freedman & Lorry, P.C. Provide Counsel and Representation in all Phases of Divorce
If you are considering divorce, the Bucks County divorce lawyers at Freedman & Lorry, P.C. can help you through the divorce process. Call us at 888-999-1962 or contact us online to schedule a free consultation today. Our Philadelphia and Cherry Hill, New Jersey offices serve clients in Philadelphia, Cherry Hill, Pinehurst, and throughout Pennsylvania, New Jersey, and North Carolina.