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Essential tips to protect your financial interests during divorce

On Behalf of | May 24, 2024 | Divorce

The outcome of your divorce proceedings could affect your life for years to come, especially from a financial perspective. The division of marital assets and debts, spousal support, child support and other money-related arrangements can significantly impact your financial stability long after the divorce is finalized.

As such, it helps to take proactive steps before and during the divorce to safeguard your financial interests. Below are some essential tips that can help you do this.

Gather financial documents

You do not want to be in the dark about your financial situation. Collect relevant financial documents like bank statements, tax returns, investment accounts and credit card statements. A comprehensive view of marital assets and debts can help safeguard your financial interests during the property division process.

Create a budget

You should expect some significant shift in financial responsibilities post-divorce. Creating a budget based on your situation can help prepare you for life ahead. Account for utility bills, childcare or other personal expenses that you previously shared as a couple. It will help you track these expenses and negotiate better terms for spousal or child support, if applicable.

Consider the tax implications

Overlooking the tax consequences of a divorce can lead to incorrect financial assumptions and planning errors. The division of certain assets, like investment accounts, may trigger tax liabilities. Additionally, alimony and child support payments have different tax systems.

Protect your credit

Divorce can significantly impact your credit score if you are not careful. Think of your spouse accumulating debts in joint bank accounts or credit cards. You may be liable for such debts since creditors view joint accounts as a shared responsibility.

Regularly monitor your credit report to catch any discrepancies or unauthorized activities, and consider working with your spouse to close joint accounts.

Seek legal assistance

Every divorce is unique in its ways, and having qualified legal guidance can make a significant difference in protecting your financial interests. It can also help you make informed decisions toward a fair divorce settlement.