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Step By Step Divorce: Financial Planning

You and your spouse are discussing the possibility of divorce. You may have tried marriage counseling to save your marriage, but nothing seems to be working. Divorce seems to be inevitable.

Planning is an essential part of every divorce settlement. Separating or divorcing couples often face a major transformation in each of their financial circumstances. The bottom line is that two households must survive on the same dollars formerly supporting one. A divorce financial plan is a necessary resource for divorcing couples when they choose to go their separate ways.

Step One: Before Filing for Divorce

  • Locate a good divorce lawyer
  • Start your divorce financial plan – a written report that reflects your current status, your goals (including lifestyle goals, tuition goals and retirement goals) and a path to get from where you are now, to where you want to be
  • Gather financial documents such as tax forms, benefits statements, bank statements, investment statements, retirement plan statements, wills, trusts, pre-nuptial agreements, postnuptial agreements, insurance policies, credit card statements, tax returns, real estate purchase documents, sale documents, and any other document pertaining to your individual assets
  • Keep a cool head. Avoid arguments with your spouse and plan pre-divorce meetings in a neutral location
  • Keep children and family out of the conversation. Do not discuss matters with them at this stage in your divorce

Step Two: Filing for Divorce

  • File for divorce. Your lawyer will file a petition, financial statements and other documents with the court. This begins the legal divorce process.
  • This phase of divorce is very stressful – manage time so that you have a set relaxation period daily
  • Pay extra attention to your needs and those of your children
  • Work on your written financial plan – key elements to a written financial plan include: budgeting, tax planning, retirement planning, tuition planning and estate document planning (such as wills and trusts)
  • Work with your lawyer on mediated or negotiated settlements – or submit a proposal
  • Make plans and set goals for your finances after the divorce – be realistic

Step Three: After the Divorce

  • Keep meticulous records of your financial separation
  • Plan for your future
  • Get counseling for any residual feelings of anger/bitterness
  • Keep your emotional divorce separate from your financial divorce – don’t confuse child custody and visitation with money issues
  • Transfer ownership of assets
  • Close all joint credit cards and bank accounts
  • Keep copies of any support checks you have paid or received
  • Prepare a financial plan for the next year
  • Make arrangements to payoff any joint bills left over from the marriage – forward all bills in your ex-spouse’s name to him/her for financial handling
  • Start saving money