Take an honest look at your financial picture
- Bank accounts – checking and savings
- Investment accounts – IRAs or a Roth account
- Real Property – homestead and any investment properties
- Lines of credit – mortgages and any home equity lines of credit
- Credit cards – including rarely used store cards
This will provide you with an accurate picture of all assets and liabilities. Experts advise that you find out for sure if your accounts are single or joint accounts, which helps determine who will be responsible for paying what during the divorce.
Cancel joint accounts
If you have a joint checking or savings account or a joint credit card, it is generally best to cancel those accounts to protect yourself.
Remember that during a divorce, emotions run high. If your former spouse is still angry, he or she may rack up purchases on a joint credit card and leave you to pay them. In other cases, money in a joint bank account could easily disappear.
Consider the tax ramifications of a divorce
Oftentimes, when people are going through a divorce, they may liquidate assets to divide the funds. When this happens, one spouse or both may have unexpected tax liabilities. Cashing out a retirement account generally comes with large tax penalties, whereas profits from the sale of a residence receive more favorable tax treatment.
Establish your own credit
If you have had joint credit cards during your marriage, not only are you responsible if your former spouse does not pay the bills, but your credit rating could suffer. Although it may be difficult, especially if you did not have an independent credit history before you got married, the best thing you can do is begin to establish your credit.
If you need advice about handling financial matters during a divorce, contact an experienced divorce attorney. A knowledgeable divorce attorney can explain your rights during the divorce process and help you navigate your way through the legal process.
