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“Where do I begin?”
I hear that question all the time. My firm works exclusively with women who are going through divorce, and every one of those women is confronting significant change. Some clients 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.
So, where should you begin?
As a Divorce Financial Strategist™, it probably comes as no surprise that I would advise you to tackle your finances first.
Here are six steps you can take to get your financial house in order as you prepare for divorce:
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 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 totally 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 you’ll need to deposit those funds in your new accounts. Open a new credit card account in your name, too. Keep in mind, though, that new federal regulations are making it harder than ever for women with little or no income to establish credit on their own. Proceed with caution, but do proceed –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. (See my post, How To Protect Your Credit Score During Your Divorce, for more tips.)
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. Open a post office box, and give yourself peace-of-mind knowing 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. After all, women going through divorce need to Think Financially, Not Emotionally®
You want to emerge in the best shape possible, with your assets protected and a sound long-term financial plan in place.
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.