Divorce is not something that many – if any – people plan to experience in their lives. It is something that nonetheless comes about, and are many elements to a divorce that require attention, from the legal side of the equation to the emotional side. All the while, though, it is just as important to pay heed to the financial side – particularly where parts of your own financial situation could be endangered. What should you do to protect your finances in divorce?
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First and foremost, you should seek legal advice. This is a broad and perhaps vague sentence in isolation but represents the shrewdest move you can make to protect your finances. Family lawyers are well-versed in the division of assets between parties, as well as the legal divorce process; as such, choosing the right one can be useful for multiple reasons during your divorce.
As part of your divorce proceedings, you should arrange for an initial consultation with your lawyer in relation to the size and shape of both your personal and joint finances. How much do you share, and roughly how much have you attained since marriage. ‘Matrimonial assets’ such as those attained post-marriage can be a little trickier to navigate, with ownership effectively being joint. However, your lawyer can furnish you with advice as to handling your own finances in a safe manner – some points of which will be outlined below.
Prepare for Financial Disclosure
The central element to addressing your financial situation in divorce is the formal disclosure of your finances. This is a legal requirement so that the court can properly assess the situations of each party and disburse assets accordingly. You should gather any and all financial documents you hold regarding your personal wealth, and, where necessary, get formal valuations for assets such as businesses or homes. All income and holdings must be declared, to discover what do and do not constitute matrimonial assets.
Freeze Joint Accounts
Whether or not your divorce is an amicable one, you should be taking active steps where possible – beyond what is required of you for the divorce process – to ensure your personal assets are not impacted. The divorce process can bring out unpredictable behaviours in even the most amiable of ex-partners, and irrational decisions can sometimes be made despite the difficulty they bring to proceedings – and despite their illegality.
For this reason, any joint accounts should be directly addressed as a matter of priority. Ideally, all joint accounts – whether shared current accounts or shared credit cards – would be frozen, in order that no further transactions can take place until a formal agreement has been litigated. This would prevent your ex-partner from withdrawing money that was rightfully yours, or from arbitrarily increasing your debt burden.
Speak to Lenders
Finally, you should also put time aside to speak to any lenders beyond banks or institutions with which you might have credit cards. Larger loans and mortgages can present difficulties, whether or not they are shared. As the sole name on a mortgage agreement, you may no longer have the money to afford your mortgage, requiring discussion with your lender; meanwhile, joint mortgages remain the joint responsibility of both parties, requiring discussion of carrying on joint payments.