Going through a divorce is a pivotal time in your life that comes with the task of understanding your marital finances as you experience a wide range of emotions. While there are many different factors to consider when divorcing, finances are at the top of the list because they impact so many areas of your life. Knowing where you stand financially today will help you to make better decisions for tomorrow.
As we explore the importance of understanding your marital finances prior to divorce, we will also explore what types of financial information you should gather before your divorce so you can be well prepared.
Why You Need to Understand Your Marital Finances Before a Divorce
Help to Secure a Fair Settlement
One of the main reasons why you need to know where you stand financially before you divorce is so that you can obtain a fair settlement. Understanding factors such as joint bank accounts, debts, and expenses, can ensure that you get a fair settlement. Being unaware of your financial health can leave you at a severe disadvantage when it comes to negotiating a settlement.
Planning for Your Financial Future
Divorce means you will only have one income to rely on. Knowing the money, you have, your budget, and your debts, can help you map out a plan for the future. Alimony, child support, and the terms of your divorce settlement will provide the framework for your new financial picture.
Being aware of retirement accounts, life insurance policies, and other assets can help you determine what steps you need to take to be financially stable long after your divorce.
Helpful to Divide Assets
Knowing where you stand financially can help you to better divide assets during the divorce process. Being aware of your debts and income can help you determine what type of settlement you should seek. If you do not have a clear picture of what you own, you will not know what you are rightfully entitled to during the divorce process.
May Influence Current Spending Habits
Being aware of your marital finances before divorce may influence your spending habits now. You may realize that you need to start saving money to be financially comfortable after your divorce. Many people may also realize that their spouse is spending too much money, which can also impact the divorce and people’s financial situations.
What Type of Information Do You Need About Marital Finances?
Many people can get confused about the types of information they need when it comes to their marital finances. Here are the things you need to look for:
Assets
Take inventory of all your belongings and property. You also want to know wages, bank balances, retirement counts, pensions, investment property income, jewelry appraisals, life insurance with cash value, inheritances, and any property that is jointly owned.
Debts
Being aware of debts is just as important as knowing everything about your assets. Joint debt and individual debts are both valuable to know. Types of debt to take inventory of include:
- Mortgages
- Credit cards
- All types of loans
- Tax debts and liens
- Any other debt acquired by you and your spouse during your marriage
- Child support or alimony from previous relationships
Expenses
What are your utility expenses? Do you have a car loan? What is your monthly grocery bill? These are all things you want to take into account when looking at your marital finances. Look at the previous month’s expenses to gauge bills that do not have a regular charge. This will give you a good idea of how much money you will need monthly to live comfortably after your divorce.
When it comes to expenses, you should also take into account if other family members are helping with the expenses. If you have parents living with you, are they contributing to the mortgage payment and house bills? Will they still be after the divorce? These are factors to consider as you lay out your marital finances and look at your complete financial picture.
The Bottom Line
When it comes to your marital finances, knowledge is power. You want to know everything you can about your finances so that you can obtain an adequate and fair divorce settlement. Not being aware of certain financial items can put you at a disadvantage and can end up costing you in the end…literally. Taking the time to educate yourself now will certainly pay off in the end as you go through the divorce process.
If you are looking for more information reach out to the Law Offices of William M. Strachan, and we would be more than happy to assist you.
