15 Money Moves To Make While Negotiating Your Divorce
Written by
Laura Gariepy
Edited by
Amber Barkley
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A divorce upends your entire life, changing your relationship status, living arrangement and financial standing in one fell swoop. Fortunately, with some education, planning, determination and perhaps assistance, you can take control of your finances.
Several experts offered their top money moves to make while negotiating a divorce. Following them could help you get through this challenging time with more money in your pocket, more peace in your heart and more optimism for your future.
Stash Some Cash
Make sure you have cash available to cover your daily expenses and legal costs.
“I’ve heard too many horror stories about people’s debit cards being declined at the grocery store while they’re in line with a cart full of groceries, because their spouse canceled the card and moved all of the funds out of the account,” said Jaclyn Roberson, senior partner at Roberson Duran Law.
Separate Your Finances
Leslie Tayne, finance and debt expert and founder of Tayne Law Group, said, “When I got divorced, my ex and I separated bank accounts and all financially connected matters. I would recommend separating finances as soon as possible in the process and keeping an eye on credit from the outset.”
You might also want to freeze any joint credit card accounts.
“I have had clients who had to deal with unexpected additional debt owing to their spouses abusing shared credit cards,” said Julia Rueschemeyer, family law attorney and divorce mediator.
Gather Financial Documents
Rueschemeyer also encouraged you to find all your financial documents as soon as possible, including “tax returns and other taxation documents, bank statements, esoteric retirement accounts and debt records. I have had cases where these become harder to retrieve with time and proceedings.”
Create a Budget
Victoria V. Kirilloff, certified divorce financial analyst (CDFA), family financial mediator and founder of Divorce Analytics, said, “The most important thing someone should do, especially if they are seeking child support or spousal support, is make a budget based on historical financial data. During the financial discovery process, each person has to disclose their income and expenses from which the child support and spousal support are calculated.”
Become Financially Independent
Now that you’ll be a team of one, you must stand on your own two financial feet.
“Knowing how to budget and manage your finances during a divorce, including [opening and managing] bank accounts and credit cards, gives you financial autonomy and will help set you up for success during this challenging time,” said Tayne.
Mind Your Mortgage
You need to have a plan for your mortgage.
Dan Casey, CDFA and founder of Bridgeriver Advisors, said, “Just because the home is or may be awarded to one spouse doesn’t dissolve the legal requirement for the other spouse to pay the mortgage if both names are on the mortgage. As long as both names are on the mortgage, both are liable for any late or missing payments.
“If one spouse will remain in the home, they should make sure they can qualify for the mortgage alone and take the necessary steps to remove the other spouse from the deed and mortgage.”
Update Your Beneficiaries
Once you’re divorced, you likely no longer want your ex-spouse to get the money from your financial accounts should you die before them, so it’s essential to update the beneficiaries listed on those accounts.
“In some instances, I have seen ex-spouses unintentionally inheriting assets simply because the paperwork was not changed,” said Rueschemeyer.
Consider the Tax Implications
When you move money around in a divorce, you may have to deal with tax consequences.
“For instance, a 401(k) has a tax obligation; hence, $100,000 of that account is not equal to $100,000 in cash,” Rueschemeyer said.
Use Marital Assets To Cover the Cost
Yonatan Levoritz, an attorney and founder of Levoritz Law Firm, suggested using marital assets to pay legal fees, because it “levels the playing field between spouses going through divorce. It will cause both parties to have skin in the game. If there’s anything left of that asset, then both parties can split it 50/50.”
Check Your Money Mindset
You must fight for what is due you.
Kirilloff said, “I have a lot of clients who have had to operate under the idea that ‘your money is my money, and my money is my money.’ They have been financially gaslighted into thinking that they are not entitled to an equitable distribution or 50/50 split — depending on what state they are in. It is important to reset the mental boundaries and make sure that they are in alignment with reality.”
Lean Into Logic
You must stay focused on facts and logic throughout the process.
“So many people are mentally exhausted by the emotional act of ending the relationship that they actually start the financial phase already with decision fatigue and sleepwalk through the negotiation, only to wake up after the divorce is finally over with a horrible settlement,” said Kirilloff.
Be Honest
Levoritz underscored the importance of being honest and acting with integrity.
He said, “Some people are purposely not amicable and try to hide assets, companies or income. If this is the case, the court will most likely give the other party the benefit of the doubt when it comes to other types of support, including the division of assets.”
Seek Professional Help
Getting divorced can be a complex and traumatic experience, so Roberson encouraged you to seek help.
“Don’t be afraid to hire an attorney. If you are a victim of domestic violence, you may have access to free or reduced services from nonprofits in your area. If you are low-income or not able to pay large retainers upfront, look for law firms and attorneys who will set up payment plans,” she said.
Kirilloff also encouraged you to consider hiring a CDFA, because they have financial knowledge that an attorney may not. They also understand how all of the moving parts of a divorce interrelate, so they can create a comprehensive financial negotiation plan.
Think Long Term
It may be hard to see past the current moment when you’re in the thick of the process. However, you need to try to think long term.
“A divorce settlement isn’t just about getting through today — it’s about financial security five, 10 or 20 years down the road,” said Melissa Murphy Pavone, certified financial planner and CDFA at Mindful Divorce Partners.
View Divorce as an Opportunity
While getting divorced may feel like your world is ending, it’s really just beginning.
Kirilloff said, “When mindfully approached, divorce can be a challenging and healing event. A divorce is generally the first opportunity one has to get granular with their finances and understand how they are using money and reset their relationship with it.”
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