In addition to being an emotionally difficult event, a divorce can also be financially devastating if not handled well. Disentangling your finances from a spouse’s can have a deep financial impact, not only on your standard of living, but also in the costs of liquidating communal assets such as housing or businesses. Preparing for the event beforehand can help alleviate some of the negative aspects of a divorce and significantly reduce financial loss.
Those heading toward a divorce may find it beneficial to meet with a financial advisor prior to filing or during the divorce process. It’s important to get a full accounting of the family’s financial assets as well as their current cost of living. With these in hand, a financial advisor can help a divorcing spouse prepare for a single-income lifestyle.
During the divorce process, it’s of critical importance to set up a separate financial identity. Removing a spouse’s name from shared accounts or credit cards is a start, as well as changing wills and removing your spouse as the beneficiary on insurance policies.
Preparing financially for a divorce can help limit negative financial outcomes and provide some idea of what it will cost to live separately. Before changing any accounts or taking money away from shared accounts, it’s important to remember that under Texas law any assets acquired during the marriage are presumed to be the property of the couple. Any accounts held during the marriage may be eventually be added into the communal coffer to be distributed according to any property division settlement the parties agree to.
Source: Tucson Citizen, “Get financially prepared before getting a divorce,” Hadley Malcolm, Oct.8, 2012
