It will or could be the toughest time of your life but if you get through it, then you perfectly capable of handling some of the other big storms that life will hand you.
Sound familiar? Well, this is one of the most common response you’d get if you asked a divorcee how the process was and felt. And while variations exist in our experiences, it is noteworthy to mention that the hardest bit in divorce cases is finances. And it gets worse when kids are involved. But, you always know when you have to go through the process even when the odds are stacked against you.
In this article, we explore some of the things you could do and strategies you could employ to protect your finances in the best way possible. But first:
The court investigates your assets during the court proceedings
This is where the family court requires both parties to provide each other and the court with all the details of their assets and the value of each asset. Personal property, including furniture and household goods, are valued using the current fair market value of the items, also the garage sale prices. You also need the book values of bigger valuables like automobiles, and you could get those details from the internet though you could reach out to your car dealership for the same details.
The court will also request titles and deeds for property, as well as the current credit report for both parties. Why credit report? Well, this document is necessary for verifying debts or either party while also reviewing the credit history resulting from your marriage.
Other details requested by the court include your historical financial statements and bank statements, and other business interests necessary. If one party refuses to give some details/ documents, your lawyer may use a subpoena supplied by the court to get the information which will be presented in the formal court process as discovery.
While this process is utterly brutal, it’s the legal process for the dissolution of a marriage.
So, what do you do or handle your finances after a divorce?
Did you know that this is one of the most common family law questions in this legal realm? Well, here are some answers.
Take a step back to reassess
You may feel like you need to take a long trip or go for a shopping spree but, if you have to pay alimony or if you have kids, or if you managed your finances jointly, you might want to take a long deep breath to reevaluate the situation. Review all your accounts and statements as well as your cash flows. Take stock of your sources of income, expenses, and reevaluate your lifestyle. Despite the pain of a failed marriage or any other regrets therein, you should recollect and plan for the future. Are you good at budgeting? Because you should be, especially if you expect a significant drop in cash flow.
The other reason why you must start budgeting or why you have to update your budget is because you may have to deal with attorney fees and you will certainly have to deal with capital gains tax thanks to the assets you sold. These unexpected expenses will put a significant strain on your budget so, that budgetary update is crucial.
Some of the strategies you could employ including negotiating the utility bills by asking for a better deal, refinancing your home, and you could also stop buying new clothes for some time. Downsizing your home and cooking at home save a great deal of money too.
Update and evaluate the types of accounts you hold
Did you and your ex-spouse hold joint accounts? You no longer need those accounts, do you? For emotional and practical reasons, you should evaluate those accounts after the divorce. You could find a financial planner or your accountant about better options like estate planning and retirement planning.
To manage your finances, you might even want to speak to an investment adviser. When evaluating your accounts, check the monthly fees, the number of no-fee transactions, and how much interest you are earning. If your account has high transaction and maintenance fees, you should find an account with no monthly fees charged for maintenance or transactions.
You might also need a new credit card and if you shared an account, ask the credit bureaus to pull your credit report to check that all the joint accounts are actually closed.
Estate planning review
You will have to change the details, particularly your list of beneficiaries after a divorce. Input your current wishes. You should also take into account your marital deductions because your single status will attract different charges and taxes.
Get a financial planner
You might think that you have everything figured out but, that is not the case always. You need to create a new financial plan with the help of a professional to ensure that all the decisions you make are sound. For example, being a stay at home parent may not work after a divorce. And the only way for you face the harsh realities of life is by letting someone look at your books and tell you what works and what does not work. You may have big deficits that you are not seeing, and a financial planner will help you see and make appropriate changes.
You need that professional perspective to find better ways of saving for your child’s future, retirement, as well as strategies you must employ to earn more.
Redefine your goals
Divorce changes your goals and your perspectives will change, as will your priorities. So, as you wrap your mind around the new realities of life, take time to rethink what you want as well as what you want to do professionally. If there’s one thing you get out of a divorce, let it be an enlightened mind, an unburdened soul, and an invigorated spirit.
Finally, walk with your head held up high and stay positive. Think of it as a new beginning. And, don’t make your divorce everyone’s business – they don’t need to know everything.