Step 1 in Preparing for Divorce: Take a Financial Assessment

If it is really, really going to happen – if for whatever reason you and your spouse just can’t see yourselves continuing in this journey of marriage – then it is time to get realistic about preparing for divorce.

I am not suggesting that divorce is a simple solution to a very complex problem.  It certainly can’t be prepared for as one might prepare for a move into a new house (though that is also a likely transition you will need to manage). I am suggesting that divorce, in all its complexities and emotional upheavals, can be made simpler, easier, and less acrimonious with the right amount of preparation and organization.

And so with that, let’s start at the beginning and give you the steps to prepare for your divorce. Today, we’ll look at Step One; in future posts, we’ll examine the next steps.

Step #1 – Take a financial assessment.

You’ve no doubt analyzed your feelings about this impending divorce over and over again. You’ve probably tried counseling or some sort of support mechanisms. (If you haven’t we suggest that you try!) You’ve had gut-wrenching discussions and have assessed how you will feel about being separated from your spouse. Well, now it’s time to do the same process about your finances. It’s time to get realistic.

Gather all of your financial statements and organize them in one place. When I say “your”, I mean those in your name, your spouse’s name, and joint names. I find that when doing my taxes or purchasing some property it is best to get myself a multi-section portable file folder that helps me get organized. You will need:

• Mortgage Statement including any Home Equity Loans and purchase information
• Retirement Account Statement, as well as 401k’s, pension plan statements
• Credit Card Statements
• Checkbook Registry for the last year
• Any other long-term debt account statements you may have including car loans
• Bank account and investment account statements

Pull all of the paperwork together so that you can develop an overview of how your money was spent last year and what needs to be paid in the coming six to twelve months.

Then, get the highlighter out and highlight those expenses that you will take with you upon divorce (e.g., if it’s your car, then assume the car payments will go on your side of the ledger). Don’t forget those pesky annual or “‘as required” bills – like insurance and repairs.

Then add to that list new expenditures you know will be coming up in the next 24 months (braces for little Tommy or college tuition for Beth).

Pull it all together, take a breath, and walk away for a few days. Over those few days, more things will come to mind. Write them down, then start tracking down the documentation for them. Then check back here for what to do next with that assessment.