Can you afford a divorce?

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If you are one of the almost two million women thinking of getting a divorce this year, one of your first concerns should be your financial plan of survival. Believe it or not, many women reach a breaking point and pack up their bags to leave without any plan. Don’t do this!

The most important step a woman can take in this situation is to make certain she is prepared. Sure, it’s an emotional time, but you have to let go of emotion and fear and take control.

Divorce is a complicated and expensive process, especially if it drags on for years. Expenses will start to pile up as soon as the process begins. In addition to legal fees and court costs, you and your soon-to-be-former husband will now be faced with two households to support on the same budget you shared before, not to mention possible cash drains such as medical emergencies or lost wages creeping in. It’s better for you to begin amassing as much cash as possible before the process even begins.

If you don’t have credit established in your name, get your own bank account. You will surely find it difficult to buy a home, a car or take care of any other necessities after the divorce if you don’t have a credit history or a credit report.
Read as many books as possible about divorce, but also consult with legal and financial professionals. This is not the time to skimp and do it yourself. These pros can advise you on community property, your rights for Social Security benefits, how to find hidden assets, how to get the best settlement and more.

Documentation is paramount. If you’re not accustomed to handling the family finances, be sure to locate and make copies of everything: loans, trusts, wills, credit card statements, bank account information, deeds, mortgages, pay stubs, W-2s, income tax returns, brokerage accounts, car titles, all types of retirement accounts, insurance policies and even gifts you’ve received from your family. If you don’t have records, you can’t prove your ownership. You may even be able to recoup some of the money you spent putting your ex through school…if you can find the records.

If your spouse owns a business, no matter how small, dig into as many records as you can find. If you see any discrepancy or spot excess money unaccounted for, it may be best to hire a forensic accountant who is trained to find hidden money. Don’t assume your spouse has been honest with you about his finances.

A financial expert can also advise you of the tax consequences of your settlement to determine if you are getting the best settlement. Do you have a right to part of your spouse’s retirement account? Should you keep the brokerage account and give up a piece of property? Should you get the house or the beach vacation house? And, if there’s a chance that your past joint tax returns omitted income or overstated deductions, you may want to seek an indemnification clause to protect yourself if the IRS decides to audit.

Be as dispassionate as possible. Only discuss business with your lawyer or accountant, since they are charging you an hourly fee. And keep in mind that they are only your advisors. All of the final decisions are yours to make. So be as vigilant as possible and take an active role in the divorce. Work with your ex as much as possible for a practical conclusion, instead of leaving it up to the attorneys to handle everything. This way, you will have less conflict with your ex after the divorce. Some states require collaborative divorce processes, particularly when children are involved; check the credentials and experience of the attorney you choose in this situation.

This is certainly not to say you shouldn’t fight for what is yours. Don’t be sensitive about making waves; treading lightly might lead to your giving up more than your fair share of marital assets or future income. You must insist on getting what you need and deserve to ensure a stable future for you and your children. Most states have laws that require equitable distribution of assets acquired during the marriage, but this is always an area in which you should seek legal advice.
If you put your career on hold during your marriage or chose to be a stay-at-home mom, it’s important to create an income stream for yourself and your children. Perhaps you can seek out career counseling at a local college or job center before the divorce process and prepare for the possible expense of going back to school for a new career or a refresher degree.

A divorce is an emotionally wrenching experience. Just remember to deal in facts and figures. Prepare as much as possible ahead of time and lean on professionals you trust who will work to protect you as much as possible through the entire process. HLM

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