How you deal with your finances during divorce can have major repercussions for you and your ex. At Mayer & Young, PC we want you to approach money matters correctly by following these financial do’s and don’ts.
DON’T: Upset the status quo.
In order to get a fair and accurate accounting of everyone’s assets and potential distributions, everything must remain as stable as possible throughout the process. This is why automatic restraining orders go into effect when divorce proceedings start.
Don’t cancel the other person’s health insurance, cell phone service, and/or car insurance. While it may feel unfair to keep shelling money out for someone who no longer wants to be associated with you, these financial payments are all considered in the settlement of your case. Beyond that, there can be penalties for changing your policies without your spouse’s consent that can be costly and lead both sides to accrue additional attorney’s fees unnecessarily.
In addition, until the divorce is finalized, you are still fiduciaries to each other and are required to deal with each other fairly and in good faith. You do not want to make any financial decisions by yourself if it affects the other party, any more than you want them to do the same thing to you.
You are allowed to establish new accounts and deposit future earnings into those accounts after separation. But you don’t want to start liquidating your joint checking account or selling any personal property without telling the other person. California is a community property state, so most property acquired during marriage is jointly owned by the two of you (there are a few exceptions, of course, which you should discuss with your attorney).
DO: Put your financial records in order.
Compile and organize your records as soon as you can. In California, complete financial disclosure is a must and accumulating the records to achieve that goal can become the most time-consuming part of your case. You need to keep track of and disclose every account you own for banking, retirement, investments, loans, insurance, credit cards, and others.
Although you may be able to access this information easily online, making a list can still be tedious. Being as detailed as you can for initial disclosure minimizes the need for formal discovery and eliminates the need for potential subpoenas that ensure that everyone is following the law and being transparent. Being thorough at the beginning saves time in the end and makes the process go more smoothly.
DO: Work with a neutral finance expert.
Consider a Collaborative Divorce, which allows you and your ex to negotiate the terms of a divorce without involving the court. In a Collaborative Divorce, a neutral financial professional will help both sides to understand the couple’s financial options and to build post-divorce budgets. The financial professional will build financial models for the couple to consider in finalizing their divorce.
DO: Give us a call.
Divorce is a trying time for everyone, and it can disrupt your financial life not only during the divorce but after the divorce is over. The Collaborative Divorce process is a divorce option that is designed to help both parties to emerge from the divorce with a good financial plan for each party.
At Mayer & Young, PC we are dedicated to helping our clients through the divorce process and to create a healthy and happy future. Please contact us today and find out how we can help you.