James J. Gross, in his Maryland Divorce Legal Crier, had two excellent recent posts that included 11 tips for men and 11 tips for women to get ready for a divorce. I have used some of his ideas and some of my own to come up with the following 7 tips on finances for someone facing a divorce.
1. Have some funds available. Make sure that you have some cash or credit or money in the bank that you can use as you go through the transition from married to divorced. You will need money to pay bills, hire an attorney and purchase new things as a second household is created.
2. Prepare a budget and cut expenses. You can figure that most of the time there won't be enough money to go around. You need to be careful how you spend your money and make sure you don't waste it. Preparing a budget helps you decide what's important to you and when and how you will spend money. Part of the budget process should include finding ways to cut expenses. Reducing your spending and focusing on the essential needs will help you meet your basic needs.
3. Get control of you credit cards. Make sure you have some credit cards in your name so that you have something to use in an emergency. Make sure, as much as you can, that your spouse is not able to go crazy charging up the credit cards. That is a common strategy, especially if the cards are joint or the other spouse is the person primarily responsible for the cards. It is not really a good idea to take away all your spouse's cash and credit cards, but it will be a lot safer for you if you have control of the cards for which you are primarily liable. Just make sure your spouse has adequate resources to support himself or herself.
4. Plan to spend money for an attorney. At a time when a 35-50 page divorce decree is not unusual, it is a serious mistake to try to represent yourself in a divorce, rather than hire an attorney. If it is a matter of cost, you should check around for attorneys because there is a wide range of costs and payment arrangements; you can probably find an affordable attorney if you keep looking. The potential cost of not hiring an attorney is enormous!
5. Separate bank accounts. If you have joint bank accounts, they should be divided. Taking all the funds is not generally acceptable. You can probably take half the funds, but even that depends on the needs of both parties and what other assets are available. Separating the bank accounts will prevent your spouse draining all you funds and leaving you in the hole. Using restraint will make you look good to the Judge and the other side.
6. Create a list of your assets and liabilities. Getting started early gives you something to do with the nervous energy you have from going through a divorce. It's a good idea to gather records and prepare the list while everything is available and still fresh in mind. In most divorces, both parties are required to prepare sworn inventories. These are lists, in a standardized format, that include all the assets and liabilities of the parties. They become the basis for negotiation or a summary that often is introduced into evidence at trial (if there is a trial).
7. Keep your insurance in place. Remember why you have insurance. You need it for medical care and for your vehicles and home. Keeping the insurance will help save money on medical treatment, medicine and other related services. Keeping what you have at the outset will help avoid the accumulation of unpaid medical bills or repair bills that can occur if your insurance is canceled or lapses. Usually, the cost of maintaining the policy is not too great, especially when compared to cost of uncovered medical and other services. The insurance will have to be split up eventually, but it can be done later when both parties have time to sort things out.
If you are possibly facing a divorce, you should follow through with the actions outlined above to protect the family finances. Good luck!