No one goes into a marriage with a plan for it to end. But we all know they sometimes do. If you’re unhappily married, and thinking that you might want out, finances are probably the last thing on your mind.
But forgetting to plan for your finances at this time can be a huge mistake, so huge it can impact your financial well-being for the rest of your life. So please, if you’re even thinking about divorce, take these four steps before you make a move.
Meet With A Divorce Attorney.
The initial meeting with a divorce lawyer is usually free, and does not in any way obligate you to work with that lawyer or even to get divorced. Here’s some advice on how to select an attorney.
Make A Budget.
Once you and your spouse separate, you may find yourself living on your own income for the first time in a while. Will you be able to do it? The LearnVest Budgeting Tool can help you find out. Keep in mind that if you’re getting health insurance through your husband’s employer, you will need to get your own health insurance, through your own job or elsewhere. Your husband’s employer should give you the option of continuing under his insurance plan for up to three years under COBRA, but this can be an expensive option. Making a budget can help you figure out how to make this and other changes so that leaving your marriage won’t put you into a financial tailspin.
Once you and your spouse are separated, you’ll need to have copies of credit card bills, documents from any other debt you or he may have incurred, plus copies of your bank accounts, deed or lease to your home, and any other assets you or he may have, such as investments. If you leave, or if your spouse leaves taking these documents, you could find yourself in a bad position later on when it’s time to divide things up. So before that happens, take the time to scan any relevant documents so you can be sure you’ll have them when you need them. ScanR, a handy piece of software that lets you scan documents using your cell phone camera can make this job much easier.
Make A List Of Assets And Liabilities.
Now that you have scans or copies of all you and your spouse’s accounts and expenses, use them to create a list of all your and your spouse’s assets (such as property or investments) and liabilities (such as debt). This asset and liability calculator can help.
Consider tax consequences as you assess the value of each of these items. For instance, if you have $50,000 of equity in a house that you bought recently and has appreciated little in value, and a $50,000 stock portfolio that has done very well over the past ten years, capital gains tax will wipe out a portion of the stock’s value when it is sold, so the house may be the more valuable asset.
We realize all this sounds very, well, calculating. If you’re thinking about leaving your marriage, it may seem hard, or even cold, to plan ahead for your finances in this way. But keep in mind that none of these steps means you’re obligated to actually end your marriage—you could still change your mind at any time and stay. But if you do decide to go, you’ll have protected yourself before you leave.