6 Strategic Steps to Protect Your Finances and Legal Rights During a Divorce

A divorce is not an easy thing to go through, especially considering how stressful it is to end a marriage. But, if you act early to look after your money and your rights as a parent, you can stop bigger problems later. Taking steps now can help you stay away from long court fights.

Here are six simple steps to help you protect your future and find your way in the legal system.

1. Establish an Independent Financial Buffer

Divorce often makes changes to the way you get and use your money day to day. This can happen when the bank puts a stop on shared accounts or cards. It is very important for you to have control over your own money before you start the process or right after you file with a divorce lawyer.

•        Open Separate Accounts: Set up new checking and savings accounts in your own name. It is best to do this at a different bank than your joint accounts.

•        Get Cash for a Few Months: Make sure you have enough cash you can use right away. You will need to cover two to three months of living costs and any first legal fees.

•        Track Shared Outlays: Keep clear records and save all receipts for any house payments, bills you pay, or costs for children that you cover with your money while you are apart.

2. Categorize Marital vs. Separate Property

How what you own and have is divided depends on how your state or area sees it under the law. It is important to know what counts as shared property and what counts as only yours. This helps you have real expectations when you are talking with your lawyer or going through the process.

•        Marital Assets: This list can have all things you buy, any money you get, your house, retirement money you put in, and the money you put into investments while you are married.

•        Separate Assets: These are things you had before marriage, things you got from family, gifts for you alone, and certain money from an injury just for you.

•        Beware of Commingling: It is important to understand that separate property may become marital property if it is combined in a joint account or used to cover joint bills.

3. Evaluate Alternative Dispute Resolution (ADR)

Taking a divorce case all the way to trial can be the most costly and slow way to finish things. Looking at other ways to work things out, like Alternative Dispute Resolution (ADR), can help you save many thousands of dollars. You might also get issues settled months faster this way.

•        Mediation: In mediation, an outside party will act as a go-between to allow both parties to speak with one another and come up with an agreement. Mediation is ideal for couples who are willing to find a compromise.

•        Collaborative Divorce: In collaborative divorce, each spouse has his/her own attorney who specializes in collaboration.

•        Court Litigation: This is where the decision is left up to a judge during a trial. This is often the route chosen by those cases involving conflict, domestic violence concerns, and/or financial misconduct on behalf of one party.

4. Construct a Comprehensive Parenting Plan Early

When there are young kids involved, the court will use the "best interests of the child" to guide each decision. Making a simple and clear parenting plan early can show that things in your home are steady. It helps keep everyone focused on your child's safety and their happiness.

•    Schedule/Logistics: Demonstrate the routine on weekdays. Talk about how the children travel to and from school. Describe any adjustments that will be made for the holidays and the summer vacation plans.

•       Legal Custody and Decision Making: Outline who will make important decisions regarding the child’s health, education, and moral upbringing in unison or separately.

•       Communication Guidelines: Establish your guidelines for communicating with one another. Make use of approved court applications for parenting which will keep things in order.

5. Audit Joint Credit and Manage Shared Liabilities

Dividing things like cars, homes, or other items is just one side of money matters when people split up. You also have to deal with any debts that you both share. Keep in mind that lenders do not have to follow what the divorce papers say. If the other person does not pay for a shared debt the court gave them, the lender can still ask you to pay it.

•        Pull Credit Reports: Get a full credit report from the main bureaus. This will help you see every joint card, mortgage, and loan you have.

•        Freeze Joint Accounts: Freeze or close any joint credit lines you don't use. This can stop new charges or more debt during the process.

•        Ask for Refinancing: Make sure your legal settlement says that you need to refinance or sell joint loans—like car loans or a house—so your name is taken off them.

6. Build a Dedicated Support and Legal Team

If you only use a lawyer for everything during a divorce, it can cost a lot and leave you feeling worn out. The best way is to have the right group of people to help. This way, you get advice from people who know what they are doing in each part of the process.

•        Legal Counsel: Look out for your rights. They file requests in court and work out deals.

•        Certified Divorce Financial Analyst (CDFA): Helps you figure out what your assets are worth over the years and tells you about tax effects. This can include splitting things like pensions or the home.

•        Mental Health Professional: Gives steady help for your feelings and ways to deal with stress. This lets your lawyer deal only with your legal matters.

Final Thoughts 

In order to cope with a divorce effectively, it is important to know how to balance emotional stress with good decision-making skills. The following steps can help accomplish this goal: being in control of your financial situation from the very beginning, ensuring everything is separated properly, having an effective plan of how you are going to raise your children, and having the best professionals on your side, including a highly skilled divorce lawyer.