Many people entering a divorce often don’t have a full understanding of just how expensive the process of separating from their spouse can be. Even if you’re divorcing under amicable circumstances, if you’re careless and don’t take care of your finances, your soon-to-be ex-spouse could make a serious impact on your long-term financial health.
If you’re going through a divorce, it’s understandable that you wouldn’t want to deal with complicated financial matters in the middle of an emotionally draining time of your life. However, you cannot afford to detach yourself from these issues and have someone else decide the future of your finances. If you want to retire with your savings and pension intact, follow these strategies.
Gather As Much Documentation As You Can
Being prepared with sufficient documentation is half the battle in property division. The side with the most paperwork and records at their disposal is often the one that walks away having protected their interests. At the very least, you should have three to four years’ worth of financial statements, whether from individual or joint accounts.
If your soon-to-be ex were to make a large purchase using your joint account before the divorce is final, any documentation you have will allow your lawyer to include the purchase in the property division process.
Know the Ins and Outs of a QDRO
A Qualified Domestic Relations Order (QDRO) is a document that splits and changes the ownership of qualified retirement plans like pensions and 401(k)s. The approval of a QDRO is notoriously complex, and if an administrator like Vanguard or Fidelity Investments handles your investment plan, tiny mistakes (such as using “and” instead of “but” and vice versa) in processing a QDRO can lead to exorbitant fees, not to mention having to start the process all over again.
Get an Experienced Divorce Lawyer
Even if you’re separating from your partner under the best of circumstances, it’s still a good idea to have a skilled divorce lawyer by your side to help you protect your finances. A lawyer can help prevent you from making the most common financial mistakes divorcing couples make, which will be a godsend in cases where the divorce is tumultuous, or where your ex is making unreasonable demands in terms of alimony or asset division.
Get a Financial Planner
While your divorce lawyer can certainly help protect your finances, financial planners live and breathe numbers. They understand taxes, interest rates, fees, and actuarial calculations in ways most divorce lawyers don’t. Having a financial planner working with your attorney can expedite the process of dividing assets and ensure you’re on top of your future tax and credit obligations. Lastly, a financial planner will protect your credit score during and after the divorce, preventing your former spouse’s financial decisions from affecting your ability to take on loans in the future..
Far too many people who have separated from their spouses suffer from the consequences of perfectly preventable financial mistakes. If you or a loved one needs the guidance of a family law attorney, let Daniella Lyttle of the Lyttle Law Firm help you. Schedule a consultation by calling our offices at 512.215.5225.