If you are considering a divorce, financial questions might be some of your most pressing concerns. Here are some of the most common questions:
- Should I be hiding money?
- Should I be making sure that my spouse isn’t hiding money?
- Should I put more purchases on a credit card to pressure my spouse to pay her/his share?
- What can I do if I think my partner is running up credit card debt as a way to spite me?
- At what point should I start having my paycheck deposited into an account which is not shared?
- Should I withdraw half of the money from shared savings or retirement accounts before my spouse can drain them or changes the passwords?
- Does mediation for divorce include financial advice and discovery?
Most states treat credit card debt as the partnership’s joint responsibility, regardless of whose name appears on the account. In most cases, both spouses are responsible for the credit card debt in the event of a divorce, even if one partner had been making the payment previous to the breakup.
According to the law, marital debt is any debt accumulated during the partnership, regardless of whose name appears on the account or whether both spouses ever agreed to the debt accumulation.
Protective laws prevent anyone from deciding to get a divorce and actually receiving a divorce all in one day. In fact, even if both spouses agree to split, the average divorce takes approximately one year. In the meantime, a legal separation might acknowledge your non-joint status and protect your financial assets.
Most of us realize that a divorce is a legal procedure, but many people don’t realize that separation is also a matter of legal paperwork and a change in legal status. Making a record of your separation allows you to retain more control over the income you make after the separation date and before the divorce is finalized. The separation date will also be taken into account when decisions are made regarding child support and alimony. In fact, some people find that a legal separation provides a better system for sharing finances and child support, and opt for legal separation as a long-term substitute for divorce.
Hiding money before a divorce is a poor idea, and not just because it will get you penalized in court. It is morally reprehensible and highly illegal to hide money because you want to short-change your spouse. When the discrepancy is uncovered during the discovery part of the divorce negotiations, you will receive hefty financial penalties and lose the goodwill of the divorce court.
It is also illegal to hide money as a protective measure before a divorce. If you are mistrustful of either the divorce court or your former spouse, your best course of action is to retain a good family lawyer and collect evidence. You would be better served to collect financial records which are admissible in court rather than resorting to illegal measures – such as hiding money – to achieve your aims. Divorce lawyers have tools and strategies for determining whether your spouse is disclosing their finances accurately.
If your spouse is running up the credit card bill to spite you, keep a paper trail showing average credit card expenses before you announced that you were seeking a divorce, which can be compared to average credit card expenses after you made your announcement. As previously mentioned, don’t wait to separate your accounts and credit cards until after the divorce proceedings are finished. You can separate your finances as soon as you decide to divorce, which will be months before the divorce becomes final.
If you and your spouse are able to split some or all of your finances without mediation, do it sooner rather than later. If you have money to pay off joint credit card accounts, then it would be in your best interest to do so. Pay off any joint accounts and then close the accounts. Avoid keeping joint cards with a verbal agreement to pay. If your partner fails to keep his or her end of the verbal agreement after the divorce is finalized, you won’t have any legal recourse if both of your names are still associated with the account.
Once you decide to divorce, consider closing any joint bank accounts. Split the balance evenly and deposit half into a private account. Don’t share passwords or grant access to your spouse or former spouse to ensure that the accounts can’t be drained.
If splitting your debts and assets seems like too big of a job, as it would be for most people without legal training, then seek the guidance of an experienced family law or divorce attorney. These attorneys are trained to discover and divide both debt and assets. They take both the past and the future into account. Your attorney will help you know how your tax burden may be affected if you keep the family house but relinquish your retirement assets. Questions about future child support expenses (such as childcare or college tuition), inheritances, educational opportunities, and income potential may affect the way your assets are divided.
In conclusion, finding legal ways to protect yourself will serve you best in the long-run. Organize your personal finances and important documents. Seek professional help from a divorce lawyer or a financial planner. Keep records. A fair divorce settlement will keep your finances intact during the divorce proceedings and help you step into a secure and deliberate financial future, as well.