Whether divorcing after five or 25 years of marriage, the divorce process is painful and can leave an individual feeling sad, angry, scared and vulnerable. It's normal and natural to experience a wide range of emotions when going through a process that forces one to endure so many changes.
While in the midst of all the emotional turmoil that frequently accompanies divorce, a divorcee must also take steps to protect his or her finances and financial health. While it can be extremely difficult to focus on money at a time when one's living arrangements and time with children are uncertain, doing so is critical to ensuring for one's current and future financial security.
Even in the most amicable of divorces, it's important to take steps to safeguard against an ex-spouse racking up new debt or spending down joint accounts. It's important, therefore, to take steps to close or freeze all joint checking, savings and credit card accounts. It's also wise to take steps to separate any financial responsibilities that were previously shared. For example an individual would be wise to take steps to have bills related to car payments, utilities and cellphones separated or transferred into each individual’s name.
Additionally, loan payments and credit card bills don't go away just because a couple divorces. While responsibilities for the repayment of debts will be outlined in a divorce decree, these designations mean nothing to the bank or credit card company. A better option, therefore, is to have debts transferred into each individual's name thereby shifting full responsibility for repayment of certain debts.
Assets held in retirement and investment accounts must also be divided during the divorce process. When doing so, an individual would be wise to explore options related to transferring or rolling over assets and make certain that proper procedures are followed to ensure tax penalties aren't an issue.
Individuals going through the divorce process may feel overwhelmed. A divorce attorney who has handled numerous divorce-related matters can assist and help an individual make decisions that provide for their current and future financial security.
Source: Forbes, "Finances For The Newly Divorced Made Easy," Neal Frankle, Sept. 15, 2014