The topic of finances can make a lot of people cringe or feel uncomfortable. Perhaps they do not want others to know how they are spending their money or maybe they are not aware of their entire financial picture. Regardless of the reason, when someone is approaching a divorce, the topic of finances needs to be addressed.
Someone who is facing a divorce should know what their budget is, including their household income and expenses, while also thinking about their lifestyle and standard of living. This information will be necessary for the purposes of settlement discussions and litigation, including support, alimony, etc. If one wants to maintain their standard of living post-divorce, they need to prove what that standard of living entailed, including normal monthly expenses.
We understand that, in many households, only one spouse oversees the majority of finances. If one finds themselves in a divorce situation and they need to document the details of their financial picture, consulting with an experienced divorce attorney should be the first step, in addition to the following:
- Collect Financial Documents – Once someone knows that a divorce is coming, it is important to begin gathering documentation as early as possible to get ahead such as tax returns, income documents, paystubs, bank statements, investment account statements, retirement account statements, credit card statements, monthly bills, and any other documents related to expenses.
- Create a Historical Budget – When trying to come up with a budget, it is best for someone to start with their historical budget. This is the budget that one has been using up until this point which establishes their standard of living. Calculate monthly income and expenses, whether it is in a spreadsheet or via an app, and categorize each of the expenses that are being incurred monthly, quarterly, and/or annually.
- Review Your Accounts – As part of one’s financial picture, it is wise to understand which accounts one has and how certain accounts (jointly titled accounts) should be managed if moving forward with a divorce. This is an essential part of the process and financial documentation.
RELATED: Read these 5 questions to consider before divorce.
- Take One Step at a Time – Gathering financial information for a divorce can be tedious and overwhelming during an already stressful time. Instead of getting overwhelmed, taking one step at a time can help. Make a list of the items needed, and work down the list. Any information that can be pulled together is a step in the right direction.
Making an impulsive decision to start the divorce process when one is not ready can negatively impact their outcome. Instead, taking the steps to understand one’s total financial picture and having the necessary paperwork in order before jumping into a divorce will save stress, time, and consequently, money down the road. If you find yourself approaching a divorce and need someone to help guide you through the steps to protect yourself and your family’s future, our attorneys who are well-versed in all family law matters can help. Contact us now to set up a consultation however it is most convenient for you—via telephone, video, or in person.
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