Divorce is, of course, primarily emotional. But it’s also very much financial, particularly if it occurs later in life after a lot of assets have been accumulated. One thing you’ll have to eventually tackle – once you’re emotionally ready – is how to handle the money aspect of the equation.
Every divorce is different, and lots of factors come into play here. Was the separation amicable? Are you the primary earner? Are your finances merged? Let’s go through each scenario separately:
If the split is on friendly terms—or, at the very least, you’re not worried about your spouse raiding your bank account and heading for the border—you don’t have to be too concerned with splitting up your bank accounts right away. Instead, you should focus on how exactly you’re going to begin the divorce proceedings, and how you’ll pay for an attorney. One scenario, and you should only consider this option if you’ve already agreed on the terms of the split, is to file for divorce on your own, without attorneys. You can first go to family court to decide custody and child support arrangements, and then go to court to finalize the divorce. You’ll only pay court fees, considerably less than the cost of an attorney. But you should agree to go this route together, and only if you’re on the same page about how you’ll split up your assets and the custody of your children. As a general rule, if you have enough assets to afford attorneys, you should probably hire them. You can still sort out the details amicably, through mediation or a process called collaborative divorce.
If the divorce is messy, and it’s possible your spouse could drain your bank accounts, you want to take precautions. In most states, you can remove all or some of the funds from a joint account, provided you have legitimate reason to feel the assets are in jeopardy, and place the money in another account for safekeeping. This isn’t the time to go on a shopping spree. The court will ask you to prove that you moved the money to protect it, not spend it. You’ll also need a legitimate reason for why you felt you had to do so, and spite is not a sufficient reason. Be sure to talk to your attorney before making any major moves.
If you are what a divorce attorney would call the “moneyed” spouse (in other words, you bring home the bulk of the family’s income) you may want to start to segregate some money. You don’t want to cut your husband or wife off completely, but it makes sense to open up an account in your own name and start funneling a reasonable portion of your paychecks in that direction, leaving your spouse enough to cover his or her living expenses. Certainly, if you get a chunk of money separate from your standard paycheck, like a bonus, you’d want to put it into a separate account. Now that doesn’t mean that the money won’t be considered joint funds in court—it likely will—but at least you’ll have it for safekeeping in the meantime.
If you’re not the primary earner, you want to make a summary of your budget. You need to figure out how much you need to live on, so if you end up having to fight for your fair share, you’ll know where to start negotiations. You also need to start thinking about how you’ll bring in more of an income when you have a home to maintain on your own.
Finally, both parties should make themselves aware of the family’s financial situation and assets. Gather all important information, such as past tax returns, bank and retirement plan statements, and credit card or loan balances. The idea is to get a rough estimate of what the marital estate is worth, inclusive of your home, if you own it, your 401(k) and IRA balances as well as your spouse’s, your mortgage or other debt, your regular bank accounts, and any other assets or liabilities.