10 Steps to Prep Your Finances for Divorce

Whether the breakup of your marriage was unexpected or a long time coming, you are likely overwhelmed by emotions and the difficult decisions to come. Wrapping your head around your finances is an essential first step to moving forward. The following is a list of to-dos to make your first meeting with a divorce lawyer or divorce financial planner as productive as possible. 

1. Review your net worth. Print and review a statement of net worth, or similar financial affidavit required in matrimonial actions in your state, that lists assets, liabilities, income, and expenses. This is an example used in New York courts, although the New York form is somewhat outdated and you may have expenses not listed. Be overly inclusive.  

2. Consider your budget. Use the information gathered in the first step to prepare a side-by-side pre- and post-divorce family budget. Consider future expenses you may incur, such as private school tuition, college expenses, counseling/therapist fees, legal fees, financial advisory fees, rent, career reentry expenses (education, training, wardrobe, networking events, etc.), commuting expenses, caregiver expenses, and more.

3. Obtain login and password information for all your accounts. This includes bank accounts, employee benefit accounts, trust accounts, credit card accounts, mortgage, lease or loan accounts, and insurance accounts.

4. Print or download the most recent statements for all accounts to which you have access. Also print, download, or obtain from your financial advisor or employer statements from the month or quarter prior to your marriage. Gather any documents you have appraising or valuing any property, business, or investment, as well as any title or ownership documents (think: real estate, cars, stocks, bonds, CDs, jewelry, etc.).

5. Understand all of your employee benefits. This includes health insurance policies. Seek out a human resources contact if you have questions.

6. List your spouse’s accounts. Prepare a list of accounts and benefits you know or believe your spouse has, but to which you do not have access.

7. Make a list of your property. Itemize all property that you or your spouse owned prior to your marriage, even if it was purchased when you lived together prior to marriage, and all property purchased together or by either of you during the marriage. List any gifts or inheritances obtained during marriage, or reasonably expected in the future, and whether these monies were deposited in separate or joint accounts.

8. Get your tax returns. Obtain and review your tax returns and any tax returns for your or your spouse’s business for at least the last three years. Flag pages noting any income, debt, or investment for which you do not have financial records.

9. Contact your accountant and/or financial advisor. Discuss the documents you have compiled with them and get any further documents or information you are missing. If you are concerned about contacting an accountant or advisor used by both you and your spouse, ask friends, colleagues, or family for a recommendation. Contacting a financial professional does not need to be done prior to meeting your attorney, but it can be helpful.

10. Create a new road map. Brainstorm how you would like your divorce to be resolved in an ideal world and draw up an alternative road map of what you think you could reasonably accept. Think about where you and your spouse would each live, how much time the children would spend with each of you, what kind of financial support you would give or receive from your spouse, what your current standard of living is, and what, if anything, you could forego while still maintaining the lifestyle to which you have become accustomed.

You should devote several hours to this project. Even if you have not typically been managing your family’s financial affairs, you want to have a solid understanding of your and your spouse’s income, expenses, assets, and liabilities. The more knowledge you have about your financial position, the better a professional will be equipped to advise you.

Keep in mind that even if you have been paying household bills and managing expenses, as you delve deeper into your financials, you may be surprised to learn you have fewer liquid assets than you suspected. Clients often come to me convinced that their spouse is hiding assets and income, but more likely than not, the ugly truth is that as a married couple, they have been spending beyond their means. Post-divorce, they will need to support two households. Adjustments will need to be made and having a full grasp of the financial picture will serve you well. Try not to let dismay and worry turn into accusations of financial fraud without doing all your legwork. Vitriolic accusations can set the tone for a hotly contested divorce and shut down more productive courses of action like mediation, negotiation, or collaborative divorce. These preparations can make the divorce process easier for everyone involved.

This article is made available for informational purposes only by Kimberly Gantcher Spodek PLLC, and should not be construed to be formal legal advice. By reading this article, you understand that there is no attorney-client relationship between you and the firm. The content of this article should not be used as a substitute for obtaining competent legal advice from a licensed professional attorney.

Kimberly Gantcher Spodek is a member of the DailyWorth Connect program. Read more about the program here.