Divorce: Preplanning Strategies

Divorce: Preplanning Strategies

Nobody enters a marriage expecting it to end, but the sobering fact is that nearly 40% of marriages today result in divorce. This process can be financially taxing, particularly for women who may see a decrease in their standard of living by as much as 30% within the first year post-divorce. Men, while potentially more financially stable, often lose valuable time with their children.

At the heart of many divorces is the issue of control—whether financial or personal. When one partner holds too much sway over the marriage's finances or decisions, the other may feel diminished, leading to a growing sense of dissatisfaction. The journey back to self-esteem can often culminate in divorce.

Here are several strategic steps you can take to protect yourself financially if you suspect your marriage is struggling:

1. Keep Non-Marital Assets Separate

Ensuring non-marital assets remain separate is crucial as they are not subject to division. Categories of such assets include:

• Property inherited by one spouse

• Proceeds from personal injury awards, such as workers' compensation

• Items owned before the marriage

• Gifts given to an individual rather than the couple

If these assets are mixed with marital ones, they might be considered part of the marital estate during a divorce. Still, tracing the origin might offer a way to reclaim them. For instance, if a pre-marriage car is sold and the money is used for a new car purchase during the marriage, retaining documents can help demonstrate the non-marital origins.

2. Establish Your Own Credit

Be sure your name is on all shared accounts and create an individual credit profile by having at least one credit card in your name. An individual credit history is invaluable, facilitating future loans, mortgages, and credit card approvals post-divorce.

3. Review Your Financial Holdings Regularly

Keep thorough records of all financial assets, including those in your spouse's name such as bank accounts, IRA's, or stocks. Secure copies at work or in a personal safety deposit box, as important documents can go missing during divorce proceedings.

4. Time Your Divorce

The timing of your divorce can greatly impact your financial situation. For instance, in a single-income household, a non-working spouse must meet a 10-year marriage requirement to claim Social Security based on their partner's earnings. Thus, delaying or advancing the divorce could have significant implications.

5. Close Joint Accounts

If divorce is inevitable, promptly notify joint credit-card companies in writing to freeze accounts and prevent liabilities on future charges, including legal fees. Also, consider closing joint bank accounts. Document any transfers or expenses post-withdrawal to assist with divorce proceedings later.

6. Hire an Experienced Divorce Lawyer

Enlisting a skilled divorce attorney early on can save you from costly mistakes. Ensure your choice is well-versed in family law and divorce by asking the right questions about their experience and approach to handling divorce cases.