Divorce Planning: Financial Tips During a Divorce

Q: My husband of 20 years just asked me for a divorce and it is something that I do not want.  I have been at home with our children for the last 12 years and this seems to be coming out of the blue.  What should I do?

A. We’re really sorry to hear of your situation. Whether a couple faces divorce after years of struggle, or it arises “out of the blue’, divorce is nearly always traumatic. This is often the case for both parties, albeit in differing ways.

Unfortunately  it’s at this time -- when divorcing parties like yourself are most vulnerable – that you’re  also often asked to make crucial financial decisions that may affect you for the rest of your life. You may not be ready emotionally to even start the process. And yet, start you must, -- and in your case, it seems to be already starting with out you.  So, on the non-financial side, please consider getting all the help, support and information possible for your and your family’s sake.

Sooner or later, most divorcing couples face significant financial issues. Usually sooner. And in your current situation -- you may need to “catch-up”  on the financial side. It is wise to start getting organized and start protecting yourself financially now. Even if you think or hope that the two of you may reconcile, once the ‘D-word’ has been invoked in earnest, it is imperative that you take immediate steps to get up to speed on your financial situation. 

1. Make copies of everything you can.
Include the last several years’ tax returns, bank statements, employment contracts, brokerage account statements, letters regarding gifts or inheritance, real estate deeds, loan or refinance requests, children’s accounts,  retirement accounts – IRA’s , 401(k)s.  Budgets printed or on computer, credit card statements. Everything that you can think of or find.  

2. Look for the statements that come to your home in the mail.
Some statements, such as some retirement accounts, or less active bank or stock and bond accounts may be sent out only once a quarter – so try to find the old ones and be on the look out for the new. 

3. Keep them in a safe place.
I have known of individuals in your shoes do  one, some or in a few cases all of the following:  make sets of copies for themselves, another mailed to an out of town trusted friend or relative, open safety deposit boxes, take out a P.O. box, leave them with their advisor – CPA, financial planner and or attorney.

4. Take a informational interviews with one or two divorce attorneys, to get insight into the possible road ahead. 
Even if you think or hope that the two of you may reconcile – It does not mean that you will necessary get divorced, or have to hire anyone yet – but you should seek legal advise.

The point is that at the beginning of a separation or divorce, when you and you are both  still living in the same home, receiving much of your information where you are able to access it – it is so much easier to collect and safekeep this  now.  Later  it is so easy for these documents to either get moved, misplaced  or lost. And it is incomparably more difficult, painful and possibly expensive  to try to  after the fact reconstruct what you and he once owned and owed.   

Eventually much of what the financial side of a divorce entails is centered around dividing assets and debts. How can you do that if you and your advisors do not have a firm grip on what you had? Do this now and possibly save worry, time and money down the road. 

 

Cynthia Anderson Thompson, Certified Divorce Financial Analyst (CDFA ™), MBA (Harvard), is founder of Divorce Planning Solutions LLC, a fee-only financial planning firm in New York.  She can be reached at cindy@divorceplanningsolutions.com or 914-906-2919.