Divorce is expensive and it will inevitably strain your finances. It is possible to limit the damage if you have the right guidance, however. Below are a few tips to help you protect your finances while going through a divorce.
INVENTORY ALL YOUR ASSETS AND DEBTS
At some point during the process, your attorney will ask you to complete a formal document that lists all the assets and debts that may be subject to division in the divorce. You can and should begin working on this process immediately.
All assets such as your home, vacation or rental house, vehicles, retirement accounts, and household and personal items should be included. You will also need to list any debts that you owe, including a mortgage, credit card debts and loans.
REVIEW YOUR RETIREMENT ACCOUNTS
Retirement accounts, including IRAs, 401ks, pensions and annuities are subject to division in your divorce. This is true even if one spouse does not have a retirement account or has contributed very little to it during the marriage. It is important to determine what funds were contributed to your or your spouse’s retirement accounts during and prior to your marriage and to provide documentation of those amounts to your attorney.
KNOW THE NATURE OF YOUR PROPERTY
Separate property is classified as the property that you owned prior to marriage and property that you received as a gift or that you inherited either prior to or during your marriage. This can include funds contained in accounts or retirement plans and tangible assets.
Any property that was acquired during the term of your marriage is presumed to be community property. This is true regardless of which spouse purchased or paid for the property or whose income provided the funds to make the purchase.
There is a presumption that all property subject to division in a marriage is community property. That presumption can be overturned by providing documentation that the property was acquired through gift or inheritance or was owned prior to marriage.
You are entitled to receive any property that you can prove is your separate property without splitting the value with your spouse. However, if you can’t prove it, you may not receive it. You will need to work on obtaining any documentation that you can to support your argument that each asset claimed to be your separate property is actually your separate property.
In order to equalize the division of assets for each spouse, the court will need to know the value of each item. It is common for each spouse to provide a value for those community property assets that differs from the value that the other spouse suggests. If you want the court to use the value that you suggest, you will need to be prepared to show evidence of the value that you claim.
REALIZE THAT YOU MAY NOT RECEIVE EVERYTHING THAT YOU WANT AND YOU MAY RECEIVE SOMETHING THAT YOU DON’t WANT
Most people believe that keeping their finances separate during their marriage will allow them to maintain those bank accounts or assets in a divorce. This is not the case.
Even if you have maintained your own bank account throughout the marriage and only purchased assets with the funds contained in that account, the law provides that any income earned by either spouse during the term of the marriage is community property. Thus, your income, and any assets purchased with it, is subject to division in a divorce.
This is true even if your spouse was unemployed for extended periods of time during your marriage, regardless of whether their unemployment was due to a voluntary election not to work or a drug or alcohol addiction that prevented them from maintaining employment. Your unemployed spouse is likely still going to be entitled to an equal division of the marital estate.
While the law may not always seem fair, it does provide specific rules that each party can rely on. Unfortunately, those rules may result in your spouse receiving a portion of the assets that you believed were yours or you being required to pay a portion of the debts that you thought would be your spouse’s responsibility.
HIRE AN EXPERIENCED FAMILY LAW ATTORNEY
While you are unlikely to receive everything that you want out of a divorce, being represented by the right attorney will help you protect your finances.
An experienced family law attorney can help you avoid unnecessary losses and prepare to manage those losses that may be unavoidable. More importantly, an experienced family law attorney can assist you in preparing to present your case to the court in a light most favorable to you, thereby ensuring that you receive everything that you are entitled to under the law.