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As a divorce approaches, you need to prepare yourself financially, both for the divorce process itself and afterwards. Essential steps are getting organized for the financial settlement and establishing your own credit history.

The Divorce Process

The process of getting a divorce has 3 phases:

1. Pleading: filing petitions and beginning the process of divorce in court.

2. Discovery: an attorney researches your financial background and gathers information about you and your spouse.

3. Trial: this step is not always necessary, especially if there are not significant assets, or if you and your spouse agree on the settlement and division of property.

The most expensive phase, in terms of attorney's fees, is the discovery phase. You can drastically cut costs (especially if the attorney is paid by the hour) if you do this legwork.

Getting Organized

Here is a list of information and documentation that you can provide to reduce your legal fees:

  • Income tax returns from the past 3 or more years
  • Joint business account records
  • Mortgage information
  • Pre- or post-nuptial agreements
  • The most recent statements of bank accounts which are in your name, your spouse's name, and joint accounts
  • A copy of both spouses' paycheck stubs
  • The most recent brokerage, pension, and 401(k) statements for you and your spouse
  • Both spouses' Social Security Earnings benefit statement
  • A copy of both spouses' employee benefit statements
  • Copies of deeds in your or your spouse's name
  • Records of inherited property
  • Copies of your will and your spouse's will
  • Your credit card statements and any other financial statements and cancelled checks
  • A credit report for you and your spouse to check for outstanding liabilities
  • A list of all other assets (including cars, antiques, jewelry, etc). Some of these items may need to be appraised.
  • A list of the assets which you would like to keep
  • If you have children, create a record of the time you spend with them per week, including any activities which you do together
  • All insurance information (health, house, car etc.)
  • Any business partnership agreements

Once you've identified all assets and liabilities, separate them into joint assets, your assets, and your spouse's assets. Anything accrued during the marriage is usually considered joint assets, whereas anything you brought to the marriage or bought or received after the separation are your assets.

It is possible to go through the divorce process without an attorney. You can file the documents at the courthouse and appear before the judge at a hearing. However, it is not advisable to do this unless you expect the divorce to be an easy one--free of disagreements and complicated division of assets.

Establishing Credit

Women often let their credit history lapse when they are married. If all financial accounts, leases, credit cards, and bills are filed jointly, your personal credit history stops building. Why is this important?

After a divorce, it is likely that you will want to qualify for credit, perhaps for a car loan, home mortgage, or for financial emergencies. A good way to build your own credit history before you're divorced is to open a credit card in your name only. To build a history, you must use the card, but it's essential to build a good credit history by paying off your balance in full every month.

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