Although no person wants to think about planning for a divorce, divorce occurs in almost 50 percent of all marriages. If one party is thinking about divorce he or she should plan prior to filing for divorce. One should especially consider the financial consequences of divorce.
Separation of Non-Marital Assets
Non-marital assets are assets that are not subject to division during divorce. If the party commingles their non-marital asset with a marital asset, the non-marital identity of the asset may be lost. Tracing of non-marital assets may often be conducted. Examples of non-marital assets may include:
- Inherited property.
- Proceeds from personal injury awards.
- Property owned prior to marriage.
- Gifts made to one party by someone other than his/her spouse.
Establishment of Credit
It is very important for the party contemplating divorce to establish his or her own credit. The party may establish credit by placing his/her name on the household accounts or obtain a credit card. Establishment of credit is important if the party wishes to apply for a loan, buy a home or a vehicle.
Review Marital Financial Material
It is important for both spouses to be knowledgeable about their financial status. It is important to make copies of 401(k) statements, pension statements, social security statements and other financial statements. The issue of finances can become very murky during divorce. Sometimes one party conceals or attempts to conceal certain financial assets from the other party during divorce proceedings, and knowledge of one’s assets may help curtail any type of potential concealment.
If divorce is in the near future, it may be advisable to contact credit card companies and other creditors to close the joint account or freeze accounts. If one spouse discovers that divorce is imminent, he/she may spend money or go and charge items that the moving party does not want to be responsible for. If one spouse does close an account, they should request written documentation that the account was actually closed.
It may sound silly, but timing your divorce may be of importance depending upon the circumstances. If one party has not earned enough or if tax ramifications may be adverse, a spouse may wish to delay filing for divorce until he or she is in a better financial position.
Consult an Attorney
Although hiring a divorce attorney is not a prerequisite to commencing divorce proceedings, it would be advisable for the party desiring a divorce to meet with an attorney prior to doing so. Often times attorneys are better equipped to handle issues that may arise during divorce proceedings. The attorney is certainly able to handle any issues without the degree of emotion that the moving party may possess. Simply because the party meets with an attorney does not mean that the party must hire the attorney to represent them in their divorce proceedings.