Whether you are the family Chief Financial Officer or haven’t paid a bill for years, you need to have an understanding of the family finances before filing for divorce. As you start the process, try to put aside emotion.
Planning ahead can avoid future headaches. In this blog post, we offer an initial checklist for getting your financials in order.
1. Store financial documents in a file outside your home.
Once divorce paperwork is filed, it may become more difficult to get in the house. That means some documents may be out of your reach.
Copy or scan the following documents and save to your file:
- Tax returns for the past three years
- Retirement and brokerage account statements (Roth IRAs, Traditional IRAs, 529s, 401(k), 403(b) or pension statements)
- Deeds and mortgage information for all properties.
Save account login information. Print off the latest checking and savings account statements in case a password is changed.
2. Start tracking expenses.
An excel spreadsheet is one way to start tracking monthly expenses. A more streamlined option is an app like minted.com that automatically categorizes expenses and income.
This will start to give you more insight for creating budgets and negotiating asset division. How many of the expenses are fixed? Where can you make cuts? What does the home actually cost with utilities, landscaping and pest company fees, cleaning services, etc?
Do not underestimate future expenses. You could be left in a situation where you need to liquidate retirement funds or sell the home to cover everyday expenses.
3. Obtain a credit report and review it closely.
A credit report is one way to check your debts. Which debts were incurred in both of your names? The mortgage is probably one, but credit cards and vehicles may also be joint liabilities.
You need to ensure that your name is removed from any joint debts prior to a final divorce order. The failure of an ex-spouse to pay a joint liability can quickly ruin your credit rating. The creditor may also hound you for the full balance.
These three steps are only a starting place. Speak with a family law attorney at Ruth Vernier & Associates to discuss how to proceed. Our firm seeks win-win solutions that are right for your family.