Take an honest look at your financial picture. Before making any decisions about your finances in the initial stages of your divorce, you have to have a clear understanding of your complete financial circumstances. Itemize all of your accounts, including:
- Bank accounts – checking and savings
- Investment accounts – IRAs or a Roth account
- Real Property – homestead and any investment properties
- Lines of credit – mortgages and any home equity lines of credit
- Credit cards – including rarely used store cards
This will provide you with an accurate picture of all assets and liabilities. Experts advise that you find out for sure if your accounts are single or joint accounts, which helps determine who will be responsible for paying what during the divorce.
Cancel joint accounts. If you have a joint checking or savings account or joint credit card, it is generally best to cancel those accounts in order to protect yourself.
Remember that during a divorce, emotions run high. If your former spouse is still angry, he or she may rack up purchases on a joint credit card and leave you to pay them. In other cases, money in a joint bank account could easily disappear.
Consider the tax ramifications of a divorce. Oftentimes, when people are going through a divorce, they may liquidate assets in order to divide the funds. When this happens, one spouse or both may end up having unexpected tax liabilities. Cashing out a retirement account generally comes with large tax penalties, whereas profits from the sale of a residence receive more favorable tax treatment.
Establish your own credit. If you have had joint credit cards during the course of your marriage, not only are you responsible if your former spouse does not pay the bills, but your credit rating could suffer. Although it may be difficult, especially if you did not have an independent credit history before you got married, the best thing you can do is begin to establish your own credit.
If you need advice about how to handle financial matters during a divorce, contact an experienced Missouri divorce attorney. A knowledgeable divorce attorney can explain your rights during the divorce process and help you navigate your way through the legal process.