Financially preparing for divorce can seem daunting, especially if you are not already used to managing your family’s finances. However, this type of preparation can help you avoid making expensive mistakes during your divorce and can help you get ready to successfully manage your own finances after your divorce.
List assets and liabilities
Listing your family’s assets and liabilities may be a good first step to help you financially prepare for divorce. In Colorado, assets and liabilities are divided based on what is fair. If you know early in the divorce process what assets and liabilities will be divided, it can help your divorce team strategize how to get you the items you really want, while making sure you receive your fair share.
Find and organize important documents
There are several documents you will probably need to be able to easily find during the divorce process. By taking the time to find and organize these documents early in the divorce process, you can help save yourself stress later on.
Try to collect all your financial documents, as well as documents that correspond to your assets, insurance and estate plan. Some of these documents may include:
Balance sheets
Account statements
Real estate deeds
Loan documents
Wills
Insurance policies
Social security statements
Tax returns
Then, organize your documents by grouping similar documents together. This may include grouping all of your home ownership documents together, grouping all of your estate planning documents together, and so on.
Examine current spending
Next, consider examining your family’s current expenses. These might include bills, food, clothing, child care, entertainment, and others. If you were able to find any documents related to your family’s monthly budget, those documents can be a good starting point as you determine what expenses you currently have. Try to determine how much your family spends each month, how many of those expenses are fixed and who those expenses are for.
Consider long-term priorities
Once you understand the expenses associated with your current lifestyle, it can be helpful to anticipate what expenses you might have in the future. Although you may not yet know exactly how your divorce will change your financial situation, it can be valuable to consider the impact divorce could have on your income or expenses. You may need to consider new expenses, such as the cost of an apartment, or changes to existing expenses, like child care.
Then, consider what your long-term priorities are. Is it important to maintain your current lifestyle, or would you rather feel financially secure? You might also benefit from considering if there are there certain assets that are especially important for you to keep. If there are, can you afford to keep those assets?
Financially preparing for divorce can feel intimidating. However, taking the time to prepare early in your divorce process can help you achieve a more successful divorce outcome, while preparing you to manage your own finances into the future.