Ramos Law Firm
Excellence in Family law
3355 W. Alabama, Suite 250
FINANCIAL STEPS TO PREPARING FOR DIVORCE
Mary E. Ramos // Attorney At Law //
PULL YOUR CREDIT REPORT
Pull your credit report before the divorce so that anything in dispute can be resolved before the divorce is final. There are three major credit reporting agencies: Experian, TransUnion and Equifax. Be sure to get a copy of your report from each of them. You can view all the reports one time per year at no charge. A website to request your credit reports is www.annualcreditreport.com. The reports are the quickest and easiest way to get an overview of the outstanding loan balances, mortgages and credit card debt that you and your spouse will eventually divy up.
OPEN INDIVIDUAL BANK, CREDIT CARD AND BROKERAGE ACCOUNTS
You also need to do this before the breakup is official. It will be easier to get a credit card and bank account in your own name while you are still married and share joint assets and debt on credit cards, mortgages and loans. This is especially important for a woman who has never established credit in her own name.
CLOSE ALL JOINT ACCOUNTS
A divorce can take time. To avoid acquiring additional joint debt (or suddenly losing shared bank assets) during the legal process, close your joint credit card and bank accounts. You will, however, still be jointly responsible for paying off the balances of the closed accounts. Cancel the accounts in writing and be sure to request that they report each account as "closed by customer" to the credit bureaus.
KEEP SEPARATE PROPERTY SEPARATE
Assets you brought to the marriage separately such as real estate, vehicles, inheritance, gifts, and money you acquired before marriage are yours to take away from the marriage. If you put any separate assets into a joint account, they may be considered joint property. If you're going to take separate money and give it to the marriage, then either decide to kiss it goodbye or do some loan documentation, because if you don't, you're going to lose it. Separate debt also travels with you. For example, if you brought a student loan into the marriage, you carry it out with you, even if your spouse was helping to pay it off.
CONSIDER SELLING THE HOUSE
Traditionally, women tend to keep the family home at all cost. Unfortunately, it's often an emotional decision that makes poor financial sense. It is one of the biggest mistakes women make if careful financial consideration has not been used in determining whether or not she can really afford such a huge investment on her own. Seriously consider selling the house, even though it's hard. It's an emotional tie that ends up strangling the woman. Sell the house and take what you make and put it into something where you know that you're able to pay your expenses and have a cushion, especially in an economy where we have no clue what's going to happen.
CHANGE THOSE BENEFICIARIES
Despite what your divorce decree says, if you don't change the beneficiaries on your will, trusts, IRAs, pension plans and life insurances, your ex could wind up with an unexpected windfall in the event of your untimely demise. As long as you're at it, this is a good time to review your various policies to make sure they fit with your new circumstances. And don't forget to delete your ex-spouse from these documents and policies and change your marital status where applicable.
RECLAIM YOUR NAME
For some women, divorce adds another task: reclaiming your name. If you’re reverting to your maiden name, you may be required to produce the divorce decree or document signed by your ex-husband that acknowledges your new name in order to obtain a new driver's license, social security card, passport or other identification. Use your new name to announce your new marital status to your circle of contacts: your doctors, employer, human resources department, children's teachers, landlord, pharmacist, mail person, health insurer and clergy. Don't forget to register your name change (and adjust your withholding if needed) on your W-4 and other tax forms and with the Social Security Administration. A mix-up could cause you to lose valuable Social Security credits for your work, and you may have to show proof of both names when applying for benefits. On the other hand, if you have small children, some women choose not to change their name because of the children. If this is your choice, remember, it is your choice as no one can force you to change your name, including your soon to be ex-spouse.
CHECK YOUR RETIREMENT
Speaking of Social Security, if divorce finds you within chipping distance of retirement, you will want to contact the social security administration. If you are 62, were married for at least 10 years, have been divorced more than two years and have not remarried, you may receive benefits based on your ex-spouse's Social Security record, even if he or she has not applied for benefits. If you are raising a child younger than 16 years old from the marriage, you may receive benefits on your ex-spouse's record even if you were married for less than 10 years. In most cases, you can expect the same amount you would have gotten if you had remained married, and possibly all of it if your ex-spouse dies. The benefits you draw do not affect amounts due to your ex's current spouse.
GUARD YOUR HEALTH COVERAGE
Divorce often forces one party to sacrifice health care coverage. Don't let this happen to you. One uncovered medical emergency can cripple your finances. Under the COBRA program, you may be eligible for up to 36 months of health coverage although the rates may be expensive. If you have no other avenue for affordable coverage, keep the COBRA plan in place until you find one.
DUST YOURSELF OFF AND START LIVING
You've survived the emotional and financial train wreck that used to be your life. If you accomplished most of these steps, you are more aware than you've ever been of your true financial picture and what you need to do about it. If you receive a lump-sum payout, don't splurge for revenge or because you feel you deserve it. There is a wealth of financial planning help online. When you're ready, consider hiring a financial planner to help you sort out your newly single money situation.