Going through a divorce is tough, especially when it comes to figuring out the finances. Often times I see one spouse drop the ball, making this process much harder than it needs to be. While most clients aren’t thrilled about communicating with each other during divorce, both spouses typically have a shared goal of minimizing money spent on legal battles. The best way to do this is by working together to get your documents organized and come to the negotiating table with some reasonable ideas in mind.
While collaborating with your soon to be ex may be the last thing on your wish list, here are some ways you can work together to save time and money:
- Be Honest About Your Finances: Open and transparent sharing of financial information is essential. You both are legally required to share all the details of your assets, debts, income, and expenses. By being upfront, you can avoid nasty legal battles and save yourselves a lot of time and cash. Lack of honesty is directly correlated with legal bills.
If you intentionally hide assets in divorce, those assets may be completely awarded to the other spouse. It is always in your best interest to disclose everything and start from there.
- Plan Your Budget Together: Sit down, crunch the numbers, and create a realistic budget that works for both of you and any kids you have. If you see how much money comes in between the two of you, its easier to understand how much is available for support, if anything.
- Divide Your Stuff Fairly: Agreeing on how to divide your property can be a real headache. But if you talk openly and find common ground, it’ll be much quicker and cheaper. Skip the court drama and try to be reasonable about splitting your assets and debts. If you know your spouse has an emotional connection to something, try not to open that bag of worms if you don’t need to.
- Tackle Debts as a Team: Work as a team to deal with joint debts like mortgages and loans – ideally before the divorce is final. Look into options like refinancing or consolidating to save some money or pay off debt with existing assets so that marital debt also ends with the marriage. Sometimes is may make sense to hold on to low-interest debt, so confirm with a financial advisor.
- Plan Child Expenses Wisely: If you’ve got kids, it’s crucial to plan for their expenses now and in the future. Talk openly about things like child support, education costs, and healthcare bills. When you’re on the same page, you’ll save a bunch of time, money, and emotional energy. Come up with a plan for when unexpected costs occur – because they will. This will avoid the need to go back to mediation or court.
- Split Retirement and Investments Smartly: Figuring out how to divide retirement and investment accounts can be tricky. Start by allocating retirement accounts to the spouse that owns it and find ways to balance the assets/ liabilities from as few accounts as possible after that. This will reduce the need for additional documents like QDROs.
- Be Fair with Spousal Support: Working together to find fair spousal support arrangements is a win-win. Avoid those never-ending negotiations and costly legal fights by being reasonable. Open communication can lead to faster resolutions, which is great for both of you.
- Get Professional Help: Don’t be afraid to lean on the experts! Mediators, financial advisors, and lawyers who specialize in divorce can be lifesavers. Their guidance will save you time and money by getting you to fair solutions quicker. You may even be able to pay for one neutral professional, instead of each hiring your own. The more you can agree on yourselves, the less you will need to pay these professionals for added help.
Tackling finances during a divorce is a whole lot easier when you’re both working together. So, don’t shy away from being open about your money, planning together, and seeking professional advice when needed. By cooperating and focusing on effective solutions, you’ll make the financial side of your divorce way more manageable and less of a burden.