Managing your money while going through divorce

Most couples walk down the aisle never dreaming that one day they could face divorce. It is very difficult when they find themselves at this crossroad. Emotions run high — there is confusion, denial, fear of what lies ahead and more. Understandably, those facing divorce have many questions about what to expect.

Even though I am a seasoned family law attorney, experienced in divorce, I am a human being before anything else. So, when I sit down with a client potentially headed for divorce, I listen closely to the particulars of the situation. Then, I strive to guide and direct her gently into the divorce process, one step at a time.

I have found that a good first step in the divorce process is to find a board-certified family law attorney who is experienced in divorce. Then, take steps to secure the marital estate and the couple’s finances early in the process.

Securing Temporary Orders

At the beginning of a divorce action, I advise clients to immediately ask the court to establish some ground rules, or Temporary Orders, for the case. Whether it be when a couple first separates, or when one or the other files for divorce, entering Temporary Orders protects both parties, the children and the marital estate.

Temporary Orders determines who will reside in the family home, when the children will spend time with each spouse, which assets need protecting, who is financially responsible for the mortgage payments, utilities, car payments, etc. These orders also set rules restraining any inappropriate conduct by divorcing spouses.

In preparation for the divorce, my client and myself review the household income, expenses, assets and debts in order to determine how bills have been paid during the marriage. The client works with me and my team to provide information so we can estimate a household budget for each spouse while the divorce is in progress.

A Temporary Orders document is then drafted and sent to the spouse and his attorney for review. Once both spouses agree to the terms of the Orders and sign off, my office files it with the court.

In my experience, couples can often agree upon reasonable, temporary financial arrangements, through their attorneys, that will tide them over until the divorce is final. Securing temporary orders provides a baseline structure for the divorce process and generally moves it along. This action usually alleviates many fears and can keep legal costs down.

Paying for your divorce

Most family law courts in the greater Houston area expect each spouse to pay a fair share of their legal costs in a divorce. This can be worked out equitably as part of each couple’s divorce settlement. As far as paying attorney’s fees, many lawyers today accept credit cards from clients going through divorce. This is an option to consider if couples do not have the cash reserves available to finance divorce. This also may be a good solution for couples wanting to preserve what cash reserves they have to pay for unexpected expenses during the divorce process.

General money management tips

During the divorce process, I advise my clients to be prudent and diligent about managing their money. Maintain the status quo, don’t run up credit card debt, pay minimum payments to credit cards, keep all receipts, and listen to the advice of your attorney. Now may be a good time to close/freeze joint bank accounts and credit cards, and open individual accounts and credit cards that you can take into your future after divorce.

You will be asked to provide copies of a variety of financial records for use by both attorneys in your case. This experience can be a bit overwhelming and “eye opening,” especially if you have had little to do with managing your household finances. For best results overall, plan to fully engage in this process and be prepared to make necessary decisions along the way.

Here is a list of the key financial items that your legal team will need for your case:

  1. Current credit reports on both spouses from all credit reporting agencies;
  2. Bank statements from all accounts of both spouses for past three years;
  3. Income tax records for last three years;
  4. Current mortgage statement;
  5. Kelly Blue Book value of cars, boats, motorcycles, RVs, etc.;
  6. List of all outstanding debts of both spouses;
  7. Current retirement and investment statements;
  8. List of all real estate owned, along with any current appraisal documents;
  9. Closing statements and other documents related to any purchases, sales or refinancing during the past three years;
  10. Any IRS, state or local tax agency reports, notices or liens.

This list is simply a start on what financial documents may be required. If one or both of the spouses are self-employed, or is a partner in a closely held business, another level of financial documents will need to be examined. Or, in the instance of one spouse being a high-level executive with special compensation benefits, the details of such packages will also need to be reviewed and factored into your settlement. If your financial situation is particularly complex, consider hiring a Certified Divorce Financial Analyst to help.

The financial piece of your divorce is vital to our team as we work with you to secure a favorable settlement agreement. We know you are trying to absorb lots of legal details, while also processing the emotional turmoil of divorce on yourself and your family. We are here to help. So, ask lots of questions.

 

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