Ending a marriage is a monumental decision with significant fallout. In addition to the emotionally charged issues inherent in the martial dissolution process, money-related stress is top of mind for most couples when one household becomes two.
Simply stated, divorce carries a significant price, both personally and financially.
Little can spare soon to be exes the trauma of splitting assets following a breakup. However, proactive steps can provide a certain peace of mind in stabilizing a potentially shaky financial future.
Document And Track Money
Setting emotions aside is necessary when identifying all types of assets that were part of a marriage. Spouses should document account numbers, dates, balances, authorized users and contact information for credit cards, bank accounts, brokerage accounts, 401(k)’s and insurance policies.
Tangible property that includes real estate, vehicles, and furniture should also be included in any inventory.
Pulling a credit report and checking activity is necessary, especially when joint accounts exist where both spouses are responsible for the full amount of the balance. One spouse neglecting monthly payments or transferring money from a joint to individual account can negatively impact the other’s FICO score, if not their financial stability. A card issuer will not hesitate to go after both spouses, regardless of one’s innocence or guilt.
Working with a spouse to close or freeze shared credit cards, joint bank accounts and credit lines can be effective. However, more contentious divorces may require a spouse to contact a financial institution directly in addition to securing legal counsel.
If all accounts between divorcing spouses have joint responsibility, opening up new individual accounts with different financial institutions can help prevent financial confusion, mistakes, and even abuse.
Changing Beneficiary Designations
No one plans for devastating, life altering events. Divorce is included in the litany of shocking and traumatic milestones. However, once the process starts, if not before, certain steps can prevent future misunderstandings.
A spouse is often a named beneficiary for insurance, stocks, bank accounts and retirement accounts. Divorce may require revising those important and powerful documents when a divorce is pending or finalized.
As with any aspect of divorce, legal representation is paramount to overcome the obstacles and even the odds.