When divorce looms -- some basic
If unhappiness describes the general
mood of your marriage and talk of going separate ways is becoming
commonplace; it's time to get your act together. Divorce sounds
likely. Have you given much thought to your finances? It's time.
Two experts in the subject -- a lawyer who has
been divorced and a certified financial planner who founded the
for Certified Divorce Planners -- offer financial survival tips
for the soon-to-be-single.
These aren't stick-it-to-your-spouse tips.
We'll leave those to your attorney. Rather, they are suggestions
for what to do before the papers are filed, with the goal of easing
the financial impact of the transition from wedlock to singlehood.
When divorce isn't a surprise, there's some
Above all, says Carol Ann Wilson, the certified
divorce planner, you should keep your emotions out of your financial
decisions. This brings to mind the old Steve Martin routine about
how to make a million dollars and pay no taxes: "First,"
he pronounced, "make a million dollars. Then ..."
In other words, easier said than done.
Think clearly, calmly
Wilson realizes how difficult it is to keep a clear mind amid
marital breakup, but she says you have to try. Otherwise, you'll
forget to do the most basic things, like making that run to Kinko's.
As people dodge the rubble of crumbling marriages,
Wilson says, "one thing that they have to do is get copies
of every financial record they've got. They have to get copies of
statements of every kind of account they have." That includes
money markets, 401(k)s, pension statements, certificates of deposit,
checking accounts, the works. These papers verify the value of assets
that a married couple holds.
Why make copies?
"When divorce seems to be on the horizon, these things
seem to disappear," she says. "One person scoops them
up and takes them away. So get copies of everything."
Wilson isn't afraid of sounding repetitive
on this issue because many people don't heed the advice and they
then run into problems: "They don't have copies of anything
and don't think it's important."
It is important, so make copies of wills, premarital
agreements, insurance papers, promissory notes, deeds, credit card
statements, even utility bills. You need to have a list of account
numbers, for everything from student loans to cable companies.
If there's a family business, get copies of
tax returns, financial statements and loan applications because,
Wilson says earnestly but mischievously, "the loan application
says one thing to the bank, the tax return says a totally different
thing and the truth is somewhere in between."
Budget for the new
OK, the car's suspension is groaning from the weight of all
those papers. What next? Make a budget, advises R.
Stuart Phillips, a lawyer who went through a divorce with hideous
"You're going to have a significant change
in your income and your expenses," Phillips says. "Generally,
the expenses aren't going to go down at the same rate that the income
does. I tell clients to do a budget so they're not left hanging
when it's time to find the money to pay for a rental deposit, for
He adds: "If they don't have a lot of
cash money, they should consider doing things to get back on their
feet, things like renting furniture, leasing a car -- it's not as
substantial as buying but you can ease yourself back into the flow
of having to live within a budget."
About those hideous financial consequences:
Phillips had been listed as an authorized user -- not a co-signer
-- of his wife's credit card. She declared bankruptcy before they
got divorced. -- and his ex's bankruptcy damaged his credit rating
so much that Phillips and his new wife couldn't get a mortgage to
buy their dream house.
The lesson: Make sure that you and your ex-to-be
divide your accounts. If you have joint credit cards (in which both
of you are responsible for payments), call the issuer and get separate
cards. If you're an authorized user of your spouse's card, get the
issuer to remove you. Do the same if your spouse is an authorized
user of your card.
Then it's time to ponder death. Not your spouse's,
yours. Revise, if you want, your will, powers of attorney, trusts,
and designated beneficiaries for Social Security and life insurance.
And review tax withholding "because, potentially, you're going
to get stuck with fewer dependents," Phillips says.
All of these suggestions might seem obvious,
but they aren't to people going through the emotional maelstrom
of impending divorce.
"Unfortunately," Phillips says, "divorce
isn't usually the time when people are most clearheaded. It's incumbent
on their attorneys or CPAs or whoever's advising them to steer them
in the right direction."
-- Updated: Aug. 7, 2001