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Divorce & Your Finances: The Do’s & Don’ts
Divorce & Your Finances: The Do’s & Don’ts

Navigating the intersection of your finances and divorce can be one of the most challenging aspects of ending a marriage. The decisions made during this time can have long-lasting implications on your financial future, as well as the outcome of your divorce. It’s essential to approach financial matters with clarity and strategic planning to protect your assets and ensure a fair division of property.

In this blog, we’ll explore important do’s and don’ts when it comes to managing your finances during a divorce. Whether you’re just beginning the divorce process or in the midst of negotiations, understanding these key factors can help you make informed decisions and safeguard your financial stability as you transition into a new chapter of life.

Do: Gather Financial Documents

Collect all relevant financial documents, including bank statements, tax returns, investment accounts, property deeds, and debts. This information will be crucial, not only for you to understand your financial situation, but your divorce attorney as well, so that they can better negotiate a fair settlement on your behalf. There is a lot of paperwork to get, and some entities might even have waiting periods before you are able to obtain them, so it’s best to start working on this as early as possible. 

Don’t: Hide Assets

Hiding assets in an attempt to keep your ex from getting them in the divorce is unethical and can lead to severe legal repercussions, so it’s not something you should consider trying. You may be found in contempt of court, leading to fines or even jail time, in addition to monetary sanctions, criminal charges, and loss of your credibility.

There are several ways one can hide assets, and not all of them may seem nefarious or illegal at face-value; for example, someone might “gift” money to a friend or relative with the understanding that they will give it back when the divorce is finalized. Purchasing physical assets like art, jewelry, or collectibles that you intend to sell once your divorce is finalized is also considered hiding assets, as is:

  • Overpaying the IRS or creditors
  • Adding phantom employees to a business you own
  • Delaying receipt of income
  • Creating fake debts
  • Having offshore accounts
  • Cryptocurrencies
  • Using trusts or shell corporations
  • Underreporting your income
  • Using safe deposit boxes
  • Manipulating property valuations
  • And more.

Do: Open An Individual Account

It’s important to consult with your divorce attorney who is familiar with your specific circumstances, before beginning to decouple the finances. It’s also important to remember that, though you may open a new bank account in only your name, it is still considered marital property according to Florida law when it comes time to divide your assets. The point of opening the new account is not to hide assets, either, but to establish your financial independence.

This isn’t to say that you can open a new account and begin neglecting the financial contributions you made in the marriage previously. It’s best to maintain the financial status quo until divorce proceedings are over in order to avoid any consequences later on.

Don’t: Make Any Large Purchases

This is not a financially-wise time to make a large purchase in general, because there are a lot of expenditures that come along with divorce, such as your attorney’s fees, court costs, change in tax status, and more. But even more so, making a large purchase during your divorce (like a car, boat, or even paying for an extravagant vacation) may negatively impact the financial outcome of your divorce later.

You likely won’t have a leg to stand on if you attempt to argue that the alimony or child support payments you’re being asked to make are more than you can afford if you’re out dropping cash on material items. If marital assets were used to make the purchase, your consequences might be much more severe, such as a financial restraining order. It’s in your best interests to hold off on making any large purchases until your divorce is completely finalized.

Do: Keep Track Of Expenses

It’s likely that you’re transitioning to a single-income by getting divorced; your living expenses may also be shifting, and it’s a good idea to keep track of your new financial reality. This includes composing a comprehensive list of your income, assets, debts, and expenses. Being prepared to share these in court shows you are dedicated to financial transparency, which should bode well for you. It also prepares you for moving forward into your post-divorce financial future.

Don’t: Use Joint Accounts For Personal Expenses

In addition to not making any large purchases during your divorce, you should also refrain from using joint bank accounts or credit cards for personal expenses once proceedings begin. Overspending your joint funds or racking up debt in both you and your spouse’s name can complicate asset division and lead to disputes. It’s possible that this could be viewed by the court as dissipating the marital assets, which again, could lead to a financial restraining order or other penalties. 

Do: Update Estate Plans And Beneficiaries

In most cases, divorcing couples want to remove their spouse from their estate plan, as well as being named as beneficiary on financial entities or accounts like life insurance policies, retirement accounts, annuities, investment accounts, and the like. This requires you to gather those documents, like your will, trust, power of attorney, and others that name your soon-to-be-ex as the individual who should inherit your assets and make legal decisions on your behalf.

In some cases, it’s easier to simply revoke the former documents and create all new ones, but it’s best to consult a skilled estate planning attorney who can help you navigate the best course of action. It’s important to remember that beneficiary designations supersede what your will says, so don’t neglect to attend to those as soon as you are able.

Don’t: Ignore Your Divorce Attorney’s Advice. Don’t Have One Yet? Contact The Men’s Divorce Law Firm Today!

Men are more liable to have the odds stacked against them when it comes to the financial outcome of their divorce. Outdated gender stereotypes might play a role in their case, leaving them forced to pay unfair amounts in alimony or child support, or get an inequitable division of the assets. Our legal team is dedicated to fighting for men and against gender bias in the family court system, and we’ve been doing just that for twenty years. Call today to book your consultation with a member of our team and learn how we can give you an advantage!