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I talk with women facing divorce on a daily basis and the emotions they are dealing with are all over the board. But there is one common thread–they all feel overwhelmed! The thought of so many changes happening so fast could make anyone want to stick their head in the sand and hide. This is the case whether she has been blindsided by her husband who just told her he “found someone new” or she is the one who initiated the divorce. Either way, the impact on her life is tremendous, which makes it difficult for her to know where to even begin.
To help get things underway and to start feeling more in control, I suggest you take the following 9 critical steps:
Gather your financial records
You should immediately start gathering all of your financial records. Having all the information together and organized will save you time and money. I created a Divorce Financial Checklist that will walk you through the key documents that you’ll need. Please bear in mind that not everyone will need every document listed. Do not keep these records in your home! Bring copies to your parents, a trusted friend and/or keep them in a safe deposit box that your spouse doesn’t know about or have access to.
Open a Post Office Box
Opening your own post office box will ensure that your mail will sit securely in a locked box that only the key holder can access. This will allow you to receive confidential mail from your divorce professionals as well as your new credit card and bank statements. An added benefit of having your own post office box is that you may receive your mail a bit faster, since it only has to go to the post office and not wait to be delivered by the postal carrier. This can be especially important for those items from your attorney that require a timely response.
Start putting money away for legal and other professional fees
I have come across too many affluent women who cannot access funds to move ahead with their divorce because their husband controls all access to the family funds. This puts a woman at a great disadvantage in terms of hiring professionals to navigate her divorce as well as having sufficient money for day-to-day living expenses (this is especially true if she needs to leave the marital home due to spousal abuse). The end result is that this financial squeeze might force you to sign a divorce settlement that is totally lopsided in your husband’s favor (choking off the money supply is an all too common tactic). Please keep in mind that things often take much longer and cost much more than anticipated, so plan accordingly.
Open a new checking and savings account
You should immediately set up a new checking and savings account at a different bank than all other joint accounts. Your divorce lawyer may instruct you to withdraw up to half of your joint funds (state law will dictate what you can and cannot do) and you’ll need to put those funds in your new accounts. Since checking accounts typically do not pay interest, only keep enough money in there to pay for one or two months of expenses. Keep the rest of the money in the new savings account, which most banks will allow you to link to your checking account. Although savings accounts do pay interest, the amount these days is fairly nominal (but better than nothing). Do not lock-up your money in any time accounts, even if the interest rate is substantially higher. Right now, you may need access to your money on quick notice.
Open new credit cards in your name only
Having a credit card in your name will help you establish your own credit. Also, credit cards may help with day-to-day living expenses during the divorce when some of your other funds may be frozen or unavailable. Do this before any divorce proceedings start, especially if you are not working or if your income is substantially less than your husband’s (you may not be able to get sufficient credit based on your own income).
Get a copy of your credit report
You should immediately get copies of your credit report. You want to be able to resolve any disputes as soon as possible. Additionally, you should monitor your credit report to make sure that your husband is not charging gifts for his girlfriend on your joint credit cards or dissipating other marital assets. If you are concerned that your soon-to-be ex-spouse might borrow money in your name, you might want to sign up for a credit monitoring service. These services will notify you anytime there’s a change to your credit history. Learn more tips for protecting your credit rating by closing and freezing joint accounts.
Change your will and medical directives/living will
You no longer want your soon-to-be ex-husband making medical decisions on your behalf. You also don’t want him to inherit all of your assets should you die before your divorce is final. Most states will not allow you to totally disinherit him until after the divorce. There is something called an Elective Share, which will give your spouse some percentage of your estate even if you remove him from your will. However, it is certainly better that he only gets a percentage of your assets (with your children getting the rest, if you have children), rather than him getting everything. You will need to redo your will again after the divorce, when you can legally remove him completely. It’s an extra expense, but definitely worth it!
Change beneficiaries on life insurance policies, IRAs, etc
If your husband isn’t aware of your plans for divorce, you should contact your insurance or brokerage company to make sure they will not automatically send him notifications. You don’t want to alert him before you are ready. Many 401K plans will not remove a spouse as beneficiary without their written consent.
Take an inventory of all personal (non-marital) property
You should take an inventory of all of your personal property. In most states, property that was yours before the marriage is considered to be separate property and should remain yours (there are exceptions to this, such as if you commingled pre-marital funds with marital funds).
Separate property includes: property that you owned prior to the marriage; an inheritance received solely by you; a gift you received solely from a third party (your mother gave you her diamond ring); the pain and suffering portion of a personal injury judgment; your engagement ring. (This is usually considered separate property because you received it before your marriage. However, your wedding band is marital property since it was a gift from your husband during your marriage.)
And by the way, in general, gifts that you and your husband gave each other during the marriage (birthdays, anniversaries, etc.) are considered Marital Property.
Unfortunately, things often disappear once the divorce process start, so take digital photographs and/or videos of everything and be sure to include a date stamp.
I am often amazed at how much better a woman feels after she has completed many of these steps. This puts her in a much stronger mental position to be able to deal with her divorce, which will hopefully ensure that she doesn’t make hasty decisions that could negatively impact her for the rest of her life.
Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC (http://www.BedrockDivorce.com), a divorce financial strategy firm that exclusively works with women, who are going through, or might be going through, a financially complicated divorce. He also advises women business owners on what steps they can take now to “divorce-proof” their business in the event of a future divorce. He can be reached at Landers@BedrockDivorce.com.
All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.