Six Must-Do Financial Steps for Women Preparing for Divorce
Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC, a firm which exclusively advises affluent women throughout the United States before, during and after divorce. He assists women and their divorce attorneys with deciding on the most advantageous way to divide marital assets and enable them to negotiate more favorable settlements, especially when there are complicated financial and tax issues. He also writes for Forbes.com and the Huffington Post.
“Where do I begin?”
This is a frequently asked question by women who are going through a divorce. Some have been blindsided by husbands who suddenly “found someone new.” Others initiate divorce proceeding themselves. Either way — and every way in-between – the process involves a tremendous amount of disruption and upheaval, and it’s only natural to feel somewhat overwhelmed at first.
As a Divorce Financial Strategist™, I advise my clients to tackle their finances first. Here are six steps you can take to get your financial house in order as you prepare for divorce:
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1. Take inventory of all financial documents and records.
It’s critical that you immediately gather all your financial records, including bank account information, mortgage statements, credit card bills, wills, trusts, etc. (See this free Divorce Financial Checklist to make sure you’re not forgetting a key document.) Make copies, and then find a secure place to keep them. Don’t keep these records in your home. Take copies to a trusted friend/family member, or use a safe deposit box that your husband can’t access.
2. Begin securing funds for legal and other professional fees.
If your husband controls all access to the family funds, he can make it difficult (if not impossible) for you to have the resources necessary to hire the divorce team you need. Unfortunately, choking off the money supply is a common tactic, one that often forces a woman to sign a divorce settlement agreement that is lopsided in her husband’s favor. Avoid this kind of financial squeeze. Be proactive. Make sure you have funds that are secure and available only to you.
3. Open new accounts in your name.
Don’t use the bank where you have your joint accounts. Go to a different bank, and open a new checking and savings account in your name. Your divorce attorney may instruct you to withdraw up to half of your joint funds (state law will dictate what you can and cannot do,) and deposit those funds in your new accounts. Open a new credit card account in your name, too. Moving forward as a single woman will require that you establish good credit and solid financial footing.
4. Get a copy of your credit report.
And consider monitoring it, too. By keeping an eye on your credit report, you’ll know if your husband is charging gifts for his girlfriend on your joint credit cards, or if he’s dissipating marital assets in some other way. Plus, you’ll also be able to keep tabs on your all-important credit score.
5. Open a post office box.
Once you have hired a divorce team, opened new accounts in your name, etc., you’ll be receiving mail that you will want to keep confidential. A post office box will ensure that your mail is being delivered to a secure, locked box that only you can access.
6. Change your will, medical directives/living will, etc.
Most states won’t allow you to completely disinherit your husband until after the divorce is final, but you can take steps to prevent him from making medical decisions on your behalf or inheriting all of your assets should you die before the divorce agreement is signed. Remember, you’ll also want to change beneficiaries on life insurance policies, IRAs, etc.
At first, divorce can seem overwhelming. But completing these six steps will go a long way to help you feel more in control and better equipped to make thoughtful, reasoned decisions. Your goal is to emerge in the best shape possible, with your assets protected and a sound long-term financial plan in place.