If you suspect a separation or divorce is in your near future, you may be concerned with matters such as how it will impact the children and if you and your partner will remain cordial. It is easy to get caught up in the emotional side of family transitions and leave any financial questions or concerns to be sorted out later, but taking the time to carefully plan and think through financial matters may make the difference between a highly bitter separation or divorce and a friendly one. Consider taking the following actions to avoid making critical financial errors.
Separate joint credit cards and loans
One of the first steps you will want to take to protect yourself financially is to close any joint credit cards or loans that may exist. If the situation is particularly tense, you may not be aware of how your partner is spending his or her money, but know this: You are on the hook financially for any debts incurred during your marriage, even if you were unaware of their existence or had nothing to do with them in the first place.
Separate any insurance policies or plans
Another important step you should take to financially prepare for separation or divorce is to modify any insurance policies, wills and related documents to reflect the change in your life. Why? Well, say your spouse is listed as the beneficiary in your will or on your IRA account, and you pass away before you can update the documents. Most people do not want their assets and life’s work going into the hands of an ex.
Check the names on your utility bills and your mortgage
Because you need water in your pipes, lights on in your home and a roof over your head, you probably cannot simply cancel your utilities or your mortgage. You can, however, take steps to protect yourself and your credit if your spouse stops paying the bills or fails to pay them on time, by putting these expenses in one name or the other.
Open your own separate bank account
Another smart step to take ahead of divorce is to open your own bank accounts. You may want to set aside some money for basic living expenses if things turn sour between you and your partner, but it is also wise to create your own account if you suspect your partner may have a reason to drain a joint account, such as a recent job loss.
Getting your financial ducks in a row is an important step in the separation or divorce process. If you need additional assistance in doing so, you may want to consult an attorney.