Divorce is accompanied by many complicated and varied issues such as support, child custody and who gets the family pet. Untangling finances acquired over marriage and property division may be especially complex. Having a financial plan can help reduce stress and improve your negotiating position.
Preparing for negotiations and dealing with any suspicions concerning your spouse’s financial activities, such as hiding assets, requires information. Collect documents and information on these assets:
- Deeds and other documents for the primary house and other real estate
- Major assets such as vehicles and real estate
- Other substantial personal property with reasonable valuations
- Savings, retirement accounts with current employers and other investments
- Retirement assets currently held with previous employers
- Money or other property brought into the marriage
- Business assets and income if a spouse owns a business
- Monthly payments for mortgages, vehicle loans, credit cards and student loans
These documents can help identify other income and assets:
- Recent tax filings
- Vehicles and boat registrations
- Business balance sheets, recent pay stubs and other income records
- Credit report
- Social Security, annuity income, pensions, and other future income documents
Dividing financial assets may be comparatively easy. But allocating real assets, such as your home and valuable personal property, can be harder and more contentious. This property, unlike many other assets, may not be divided in half.
Allocating the home can be the hardest issue. Consider whether it is supported by one or both spousal incomes and how much net worth is tied up in the property. Determine whether one spouse can purchase the other spouse’s interest or trade sufficient property for that share.
Having children may make this decision even more complicated because of the desire to continue normalcy in their lives. But selling the home and dividing the proceeds may be the most reasonable decision.
An ERISA specialist may also assist you and assure that allocating retirement savings plans is fair and done correctly to avoid unnecessary taxes.
As you think about the future, it is also important to develop a realistic financial plan for the period before your divorce and afterward. Consider that one income is covering expenses that were paid for by two spouses. Factor childcare costs and their impact on support payments.
Important parts of your financial plan should include:
- Emergency savings for immediate and unanticipated needs
- Investment strategies for a new car, home remodeling, vacation and other short- and long-term goals
- Retirement plan that also addresses taxes
- An estate plan
- College savings plan for children
California law also addresses many of these matters. Spouses may need to seek assistance to address these legal and financial issues.