The financial repercussions of divorce are daunting to any couple. Whether you have moderate assets or will need to deal with complex property division, you must adequately prepare your finances for the divorce process ahead to protect yourself. Properly preparing your finances can safeguard your assets and future as much as possible. It can also help you avoid unwelcome financial surprises during a California divorce case.
Gather Key Financial Documents
Start by gathering all key financial records and documents. You will need to fill out extensive paperwork regarding your financial assets during a divorce. Having relevant documents ready can make this process easier for you. Collect and make copies of the following:
- Personal documents, such as your Social Security card and birth certificate
- Marriage license and certificate
- Your employer’s name and contact information
- Bank account information
- Tax returns from the past three years
- Recent billing and tax statements
- Recent pay stubs or income statements
- Investments and brokerage statements
- Certificates for stocks, bonds, and mutual funds
- Retirement account or pension plan information
- Real estate deeds and vehicle titles
- Your credit report
- Will and trust documents
- Insurance policies
- Business documents
- Credit card, loan, lien, and tax debt documents
You should acquire all documents necessary to provide a comprehensive view of your financial situation – both your separate property and marital property. Back this information and documentation up in a safe place.
Determine What You Own
California uses a community property division law. Under this rule, if a couple cannot reach a property settlement on their own, the court will divide all marital or community property down the middle in a divorce. All money, property, and assets that you and/or your spouse acquired during the course of the marriage will be subject to a 50/50 split. This makes it important to determine what you own, both as a couple and as an individual.
Take inventory of your finances. Start to establish your own separate property to prepare for your divorce. If you can, keep the money that you earn in a separate bank account that only you can access. If you do not have a bank account in your name only, open one. If you have the means to do so, create an emergency fund to help you pay for the unexpected costs of a divorce. This may include months of renting an apartment or living on your own while your divorce is pending.
Do Not Make Big Financial Decisions
Protect yourself financially by avoiding major financial decisions while a divorce case is still pending. Refrain from making large or expensive purchases, as this could be a red flag for the courts. Be conservative and save as much money as you can to help prepare for the future. If you are considering a big-money decision, consult with a lawyer first to receive personalized legal advice.
Make a current budget. Track your expenses and try to reduce what you are spending. Estimate future costs, including the price of your divorce, with help from a lawyer. Create a new budget for your future that addresses what you will need to reestablish yourself and meet your long-term financial goals. You may need to seek financial assistance to supplement what you can make on your own.
Hire an Experienced Divorce Attorney
A property division agreement as part of a divorce or legal separation will have financial ramifications that can last for the rest of your life. Do not underestimate the importance of getting your finances in order prior to filing for divorce.
Know when to get professional help. Contact an experienced divorce lawyer in California for assistance, especially if you have complex or high-value assets. Your lawyer can help you organize your finances and debts, differentiate the separate property from community property, acquire all required financial documents, and protect your financial future as much as possible.