When divorce is inevitable, the best time to begin disentangling your lives may be before it occurs. If you get an early jump on separating your finances, the actual divorce process might go more smoothly. This is especially true when both spouses want the divorce; then you both have incentive to come to terms regarding financial issues. No state will allow you to divorce until you have resolved them.
The first and easiest step toward separating your money is to establish separate bank accounts. You might consider leaving one joint checking account open if you’re going to continue living together while your divorce is pending; you can use this account to pay household expenses. Even if one of you moves out, you can use this account to maintain the household until you decide what you're going to do with the home. Some spouses each deposit an agreed-upon amount monthly to service such bills. Consider opening separate accounts in your sole names for personal transactions. If you have direct deposits of your paychecks, you both need to notify your employers of the change. If your divorce is amicable, you can also close out investment and savings accounts with each of you taking half the money.
The marital home is often the most significant asset most divorcing couples own. If you are going to keep it and are financially able to maintain in alone, you don’t necessarily have to wait to refinance it until your divorce is final. Consult with an attorney to make sure you are legally within your rights to do so and that there is no downside to your personal situation. With your lawyer’s approval, you can buy out your spouse's equity share and refinance the existing mortgage into your name. Your spouse can use the lump sum payment he receives as a down payment to establish his own home. If neither of you are going to keep the home and decide to sell, you can also list it for sale prior to finalization of your divorce. Then each of you can take your equity and move on.
Debts can be one of the trickiest aspects of your finances to separate in a divorce. Consider closing or freezing joint credit cards and accounts and agreeing on a set amount you’ll pay toward each monthly to begin bringing the balances down while your divorce is pending. You can use the joint household account for this purpose, if you’ve chosen to maintain one. You can also each assume certain credit accounts. Get a copy of each of your credit reports to make sure you don’t overlook anything. You can compare a credit report dated at the time of your separation or divorce-planning with one when you part ways; if one spouse went on a spending spree with a card that remains open, courts will often assign that particular debt to the spouse who ran it up.
Your divorce decree or agreement does not bind your creditors. Even if one of you is responsible for paying down a particular loan, the lender can usually pursue both of you for payment if the obligated spouse doesn’t perform. Consider protecting yourself in your settlement agreement if this should occur. You can include language that offers a remedy if one of you has to pay an account that was assigned to the other, such as increased alimony or child support payments to compensate for the money that spouse had to spend for an obligation that wasn't hers under the terms of the decree.
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