If you and your spouse have decided to part ways, it’s important to understand that the cost of divorce—both emotional and financial—can be significant without proper planning. By preparing in advance, you can reduce unnecessary expenses, protect your assets, and ease the stress that often comes with the legal process. One of the most effective ways to control costs and safeguard your financial future is to approach your divorce with clarity and a solid financial plan in place.
Thankfully, preparation for the financial side of your divorce starts with a relatively straightforward task: gathering financial information. Once you accomplish this task, you’ll hopefully gain momentum that will help you to successfully navigate the rest of your preparedness tasks more confidently.
Lowering the Cost of Divorce by Organizing Financial Records
First, you’ll want to gather all relevant financial documents. Bank statements, tax returns, retirement account information, loan documents, credit card statements and any other records that will help you to get an accurate picture of your financial situation should be prioritized. Why? Having a complete picture of your assets, debts, income and expenses will help you and your legal team evaluate how best to divide assets fairly during your divorce proceedings.
It’s also important to gather information about your spouse’s financial situation. If you don’t have access to certain accounts or documents, it may be necessary to request them during the discovery phase of your divorce. Organizing this information early will help streamline the legal process and provide a clear understanding of your marital estate. It will also help your legal team to better discern if your spouse might be hiding assets from you in one way or another.
How Separate Accounts Can Affect the Cost of Divorce
If you and your spouse currently have joint bank accounts or credit cards, it’s a good idea to open individual accounts in your name. This will help you to establish new rhythms and get used to having accounts that must be managed by you alone. Be sure to inform your legal team before making any significant financial moves to avoid being accused of trying to hide assets or engaging in financial misconduct.
Dissipation occurs when one spouse intentionally wastes, depletes or transfers marital assets to prevent the other spouse from receiving their fair share of the marital estate. This could include actions such as excessive spending, gambling or making large purchases right before the divorce. To avoid accusations of dissipation, it’s important to be transparent and responsible with marital finances during the divorce process. Any unusual financial activity could raise red flags, so it’s best to maintain regular spending habits and keep thorough records of any transactions.
You’ll also want to make a budget, clarify how your anticipated property division arrangements will affect your finances and otherwise set your sights on the future. Taking these preparatory steps won’t be easy, but your future self will almost certainly thank you for your time and energy spent in this way.
If you’re concerned about how alimony could affect your financial future—especially if you’re approaching retirement—it’s worth taking a closer look at how support obligations might play a role in your overall planning. You can learn more by reading our article on how being ordered to pay alimony may impact your retirement.
