Divorce – Are You Ready or At Least Organized?

The decision to get divorced is never easy. Even if it is your idea, there is a lot of thinking involved. To be ready to divorce your partner usually means being able to make a clear unemotional decision that you can stand by through time. In a divorce, you must be able to let go of all the emotional connections to the other person, the good ones and the bad ones. With all emotions aside, the question “are you ready to divorce?” takes on a different meaning.

Many people who have made the decision to part ways with a loved one look at the emotional side first, or only. It is only when you take a look at the financial side that you have some greater clarity. So, the question begs, what can I do to be ready for this transition?

Divorce often entails meeting with a lot of professionals including lawyers, therapists, mediators, accountants, financial planners, real estate agents, bankers, and more. Because each divorce is unique, specific advice can only come from experts familiar with your specific situation and the laws of your state.

Whether it’s through the help of these professionals or otherwise, a good first step in navigating this life transition is to gain an understanding of where you are today. This process tells the story of your financial health. While it can be a time-consuming process and painstaking at times, begin the process as soon as you can; you will be in a better place to address the transition. In this space, we share both financial and non-financial considerations to help you take stock of your current financial picture, have a good idea of your financial situation today as a couple, and begin thinking about what you’d like to see in your new future that lies ahead.

ASSETS AND LIABILITIES:

• Gather copies of all your financial records for both you and your partner, titled jointly or separately, to identify assets, liabilities, income and expenses. Below is a comprehensive list of records to consider:
  • Checking and savings account statements
  • Investment and brokerage account statements
  • Credit card statements
  • Social Security statements
  • Retirement account statements (Pensions, IRAs, 401(k), annuities and other retirement plans)
  • Employee Benefits/Retirement information
  • Recent paystubs and employment records
  • Employee stock option plans
  • Life Insurance policies
  • General Insurance policies (health, disability, motor vehicle, property liability)
  • Deeds to properties (primary residence, secondary residences, rental properties, land, investments, timeshares), rental/lease agreements, appraisals, expenses
  • Titles to other assets (cars, boats, planes, etc.)
  • Outstanding Liabilities/Debts (personal loans, mortgages, auto loans, IOUs, HELOCs, credit lines)
  • Income Tax Returns for the past several years
  • Business financial statements (corporate interests, partnership and Joint venture agreements)
  • Estate Documents (current wills, trust documents, powers of attorney, healthcare directives)
  • Children’s bank, investment, education or trust account statements
  • Membership Information (country club, health clubs, private clubs, associations, vacation clubs, season tickets to sporting events)
  • Credit report
  • Marriage Certificate
  • Mileage and travel awards statements
  • Prenuptial or postnuptial agreements
  • Judgements and pleadings that involved either partner

• Take an inventory of tangible assets also (furnishings, antiques, jewelry, art, coins, furs, fixtures, etc.), assemble appraisals and take photos if you haven’t already.
• Check the safe or safety deposit box, and make a list of all of its contents.
• Identify what you acquired during your marriage (marital property) and what you each brought into your marriage or acquired separately during the marriage, by gift and/or inheritance (non-marital property)
• Develop a detailed estimate of your current monthly and annual income and expenses. It is a good idea to understand your current financial situation. However, do not forget to look back and determine what your past needs and lifestyle have been during your marriage. This is an area many people underestimate. You can do this by creating a spreadsheet identifying categories of expenses and prorating them over a year. You can use bank and credit card statements to capture some of this. It is often a good idea to separately identify your expenses, your spouse’s expenses, your marital (joint) expenses, and your children’s expenses. After identifying your regular expenses, it’s also a good idea to look ahead as to project what expenses you may incur in the future. Some areas to include in your analysis are:
  • Household bills (rent, mortgage, utilities-cable, gas, electric, water, trash, sewer, HOA, cell phones)
  • Food (groceries, dining out, fast food, bulk buying, online orders, take-out, coffee)
  • Charitable giving
  • Child care
  • Child support paid or received
  • Clothing
  • Entertainment
  • Gifts
  • Health and fitness
  • Hobbies
  • Holiday trips
  • Home maintenance (regular and periodic) and repairs
  • Home office/computer supplies
  • House cleaning
  • Personal grooming
  • Pets (insurance, grooming, food)
  • Schooling/education (tuition, room, board, activities, after-school activities)
  • Subscriptions
  • Taxes – personal property, real estate
  • Transportation (gas, repairs and maintenance, loans, registration, parking, taxis)
  • Travel/vacations
  • Yard services

EMOTIONAL ASPECTS:

• Consider writing up a timeline of your marriage to be able to articulate your story efficiently and effectively. It is an easy document to leave with your professional team and a good guide to facilitate your discussion with them.
• Write a profile of each party with legal names, addresses, age, birthdates and birthplace, social security numbers, education, and employment both current and former, and former marriages.
  • Identify all children of the marriage or others that may exist, including legal names, addresses, birthdates and birthplace, social security numbers and education with dates.
  • Specify the date and location of your marriage, and have a marriage certificate available.
  • Tell your marriage story in a timeline fashion, an easy way to follow. The more information, the better you can recall the details when needed.
  • Articulate your lifestyle in your story

Going forward, divorce without the emotion becomes a negotiation. There is a give and take that can occur. What is fair and equitable is not always fair and equal. Think about and develop a list of what you (and your family) would need and desire from your divorce. Consider tangible assets, financial accounts, liabilities, businesses, retirement accounts, life insurance policies, insurance, expenses, healthcare, education, vacations, and so much more. Having the facts and data in front of you puts you in a better position and frame of mind to negotiate for yourself. The best way to help yourself through the divorce process is to be organized. Know who you were as a married couple, your past, present and future financial picture, what might be negotiable and what you need and desire in the future. Our team is always available to talk with you about your specific circumstances and simply be with you during such a major life transition. Please don’t hesitate to contact us.