Be prepared. Start a document roundup—gather all financial documents and make copies. Some documents will be obvious and easy to find, others may take time and effort to locate. We’re talking everything, so the sooner you start, the better.
Examples of documents or records you’ll need: Bank statements, mortgage accounts, automobile loans or titles, credit card statements, student loans, investment and retirement/pension accounts. You’ll need current and past tax returns, life insurance policies, and real estate deeds. If either of you own a business, you will need all related financial documents, operating agreements, etc. You may find this information as paper copies or electronic, some documents may be stored in a safe deposit box.
Find the legal descriptions for real estate, and fair market value assessment or appraisals. You need the year, make, model and market value for all licensed vehicles. Investments may include valuable collections and don’t forget the value of less tangible things like airline miles. Current pay stubs and social security income records, as well as any wills, trusts, past divorce decrees or premarital/separate property agreements are essential. It’s a long list, but you need to locate anything pertinent to your financial history as a married couple.
Do a complete list of your assets, the value of each, and ownership (whose name is it in). Also complete an inventory of household items, including any family items that have sentimental value. When it comes time to divvy it all up, it’s best to have a detailed list to go through. Don’t forget anything you may have stored in the attic, basement or a storage facility.
Next, do a list of your liabilities with a current balance owed on each. Then you will need to determine all sources of income. In order to construct an accurate and realistic budget, you will need to know the numbers. Being aware, knowledgeable and vigilant will pay off.
Here are some pointers to stay on track:
- Don’t get discouraged. Knowing what you have, what you spend and what you earn will give you the confidence needed to make the tough decisions that come with divorce.
- Don’t try and hide assets. It’s sneaky, unethical and illegal. This also means don’t give away any jointly owned assets to friends or family.
- Don’t make any big purchases during this period, it may complicate matters.
- Don’t allow your finances to slide into chaos. It’s important to have a good credit rating when you start your new life so you can build future financial security.
Our final segment on divorce and finances, Part III, talks about the dos and don’ts after divorce.