1. Get Informed.
Knowledge is power. Many people go through life without a full understanding of their finances. Sometimes it’s trivial, like not knowing exactly how much money is in your 401(k), while other times, people are unaware of exactly how much money their spouse makes. Being in the dark about your combined financial situation is more likely when one spouse is the sole or primary earner or where one spouse is exclusively responsible for managing the couple’s finances. Prior to getting a divorce, it is important to get informed about your combined income, assets and debts. Make lists and contact professionals you already work with (such as your accountant or financial advisor) to get information and access regarding your joint finances. Compile information related to any properties or businesses that either of you may own and make a list of people who may have the information you need. Whether it be from inadvertence or intentional withholding of information, your spouse will be less likely to cooperate once you announce you want a divorce, so make life easier by gathering as much information as you can as early as possible.
2. Create a Paper Trail.
If knowledge is power, documentation is leverage. It is important to have concrete evidence of the information amassed related to your (and your spouse’s) financial position. This documentation will be harder to get once a divorce is in motion. Gather information related to income, assets, debts and businesses. If you don’t have access to online statements, call your bank, credit card company or financial advisor to get login information for any accounts in your name. Compile your tax returns and supporting documentation for the last few years and, if possible, the years of and immediately prior to your marriage. Make copies of everything and keep them in a safe place (preferably somewhere to which your spouse does not have access). Utilizing your own investigative skills will save you time and money later on.
If you haven’t already done so, it’s time to start recording your monthly expenses. Bills on auto-pay that you don’t give much thought to? Jot them down. Never stopped to think about how much money you actually spend on dining out each month or what your teenager spends at the mall? Now’s the time to crunch those numbers. When you get divorced in New Jersey, you have to file a Case Information Statement with the court which itemizes your monthly expenses in painstaking detail. The sooner you start keeping track of your expenses, the easier it will be to estimate and/or average them later on. Since you’ve already put together your bank and credit card statements (see Tip #2!) this process should be slightly less painful.
4. ...Then Save.
Many people underestimate the cost of getting divorced. While there are ways to reduce the overall expenses, such as following this checklist, your overall finances will take a hit as a result of a divorce. First, assuming you don’t want your ex-spouse for a roommate, your joint income will have to sustain two households instead of one. Second, assuming you’ll utilize the services of a lawyer, you’ll incur counsel fees in getting divorced. These expenses are unavoidable, but you can alleviate the financial strain by planning ahead.
5. Craft your Credit.
Preparing for a divorce means preparing for a new chapter in your life of singlehood. In part, this means that, going forward, you’ll no longer be helped or hindered by your spouse’s credit score. If you have no credit or poor credit, now is the time to start building it up. Run a free credit report to get an idea of where you stand. Next, consider the steps it may take to improve your credit score. That may mean opening a credit card solely in your name to build credit. Many people find bogus “dings” on their credit score from debts mistakenly assigned to them. A simple phone call to the debt collection agency can help alleviate this problem. Improving your credit is just one of the important steps on the important journey from “we” to “me.”
6. Time It Wisely.
They say timing is everything and the same is true for getting a divorce. If divorce is something you’ve been considering for a long time or if you don’t have a specific deadline by which you want to get divorced, it may be wise to divorce in a year where you have lower income than years prior. For example, a year in which you expect to receive an unusually large bonus may not be the most advantageous time to get divorced. While a court will typically look at your income over several years to determine income for purposes of support, reduced income at the time of the divorce may work to your advantage. Timing is also a critical factor for purposes of tax planning. If you wish to file your return as married filing jointly, you must be married on December 31st of that year. Therefore, you cannot file jointly the year in which you get divorced. Strategic planning of timing of your divorce may save you money.
7. Consider the Kids.
If there are children born of the marriage, they will likely be the most important issue in your case. Custody and child support issues can significantly impact the progress of your divorce and frequently become tangled with the financial issues like equitable distribution and support. For example, whichever spouse maintains primary custody of the children may desire to keep the marital home so the children have stability and can continue attending the same school. It is important to consider your ideal custody and parenting time schedule and to set realistic expectations for how your marital status will affect raising and supporting your children. If custody will likely be a contested issue, it is a good idea to begin documenting your respective roles and responsibilities in the children’s lives. When kids are involved, your dealings with your spouse will not cease upon entry of a divorce judgment. You will continue to co-parent with this person for years (sometimes decades) to come. Therefore, you should consider how your divorce strategy (will it be amicable or will you go for the jugular?) may affect your relationship as co-parents and how it may affect your children.
8. Make an Exit Strategy.
Planning a divorce means beginning a transition back to single life. You should give careful consideration to how you will approach the subject with your spouse and how you will live once you break the news that you are seeking a divorce. Will you try to discuss the issues with your spouse before mentioning the D-word? Will you suggest counseling or make an attempt at reconciliation? Has your relationship soured so much that you wish to blindside your spouse with divorce papers instead of giving them a warning that you want to divorce and/or that the legal process may be forthcoming? There is no one way to get a divorce and the strategy you choose will reflect your relationship as it was and how it has changed over time. If there are issues with domestic violence or you have reason to believe that living under one roof will no longer be feasible, an exit strategy is of the utmost importance. Consider your resources (both financially and strategically) to be sure you have a safe place to stay once you notify your spouse of your intentions. Even if you don’t feel unsafe, but simply uncomfortable maintaining a joint household, contemplate where you will go in advance. Having an apartment lined up or confirmation that you can stay with a relative may give you the confidence to move forward with your decision.
9. Dream Up the Future.
Remember that a divorce is a chance to start over and to be free from whatever gives you dissatisfaction in your marriage. Think about your dreams, goals and aspirations for the future, as they may inform your strategy for dissolving your marriage. If you have been out of the workforce to raise children, would you like to go back to work? Are you interested in pursuing a new career which requires going back to school? Such considerations might affect your needs regarding support. Have you always had a desire to travel and see your divorce as an opportunity to move somewhere new? Clearly, getting the marital home in your divorce would not be a priority then. Understanding what you want moving forward will help you strategize to get what you need in the divorce to make your dreams a reality.
10. Arm Yourself with Allies.
While divorce can be a painful experience for many people, you do not have to go through it alone. Arm yourself with allies in contemplation of the difficult times which lie ahead. Divorces can be lengthy and emotionally draining. A support system of family and friends will help reduce the burden. In addition to surrounding yourself with family and friends, speaking to a therapist and/or others who have been through a divorce may help you cope. You’ll also need a team of professionals to help you navigate the difficult process and achieve your desired outcome. Hiring a divorce lawyer is the best place to start. Depending on the nature of your case, you may also need financial experts, such as a financial advisor and/or forensic accountants, or custody experts, such as forensic psychologists, to assist you with your case. A great divorce lawyer will have an arsenal of professionals to refer you to who can help with your specific needs.