5 Things to Consider Before Ending Your Marriage
This is the second article in our series Women and Wealth: Taking Control of Our Financial Futures.
Divorce can be an emotional roller-coaster, even before officially deciding it is the right decision for you. When considering divorce, moments of despair may arise, leaving you questioning how you’ll manage everything alone. Conversely, there are also sparks of optimism—a ray of hope for a fresh start and the promise of new opportunities.
There are many factors to consider when contemplating divorce, a significant factor being your financial situation, especially when many valuable assets are involved, such as multiple homes, trusts, or businesses. Women typically face a nearly 30% decline in their standard of living following divorce. Thus, seeking guidance and gaining a clear understanding of your current financial standing, as well as how your financial situation might look following a divorce, is crucial.
Taking proactive steps can help mitigate potential issues and lay the foundation for a successful transition. As you consider taking steps to dissolve your marriage, here are five essential things to consider:
- Enhancing your financial literacy and involvement is key: Being well-informed about your joint financial and tax situation with your spouse equips you for the future. The first article in our series, “Are you Confident in Navigating your Finances?” can help you understand why you should be involved in your family’s finances and how to insert yourself into these conversations and decisions. If you are not currently engaged in financial matters, start asking questions and request meetings with your financial and tax advisors. Are you aware of your assets and their value? Grasping this is vital as it impacts your future earnings and financial objectives. It’s essential to acquaint yourself with your family’s tax circumstances, income sources, and investments. After a divorce, managing your taxes will become your sole responsibility.
- Understand your Social Security Benefits: If you are close to retirement age, you will want to understand your options for collecting social security after a divorce. If you do not remarry, you can collect part of your ex-spouse’s social security benefits.
- Get organized: Collect the documents you may need for a divorce, such as investment account statements, retirement account information, bank statements, previous tax returns and other tax forms, life insurance statements, etc.
Additionally, setting up your own logins for your joint accounts is essential. If you do not already have access to these separately from your spouse, you will want to ensure you can access these accounts if things go sour during the divorce.
- Check your credit score: After a divorce, you will need to put assets in your own name; if accounts or assets were under your spouse’s name, those will not apply to your credit score. Having a strong credit score is important as you might have to apply for a loan on your real estate, apply for credit to finance a car, or even get a credit card in your own name if you don’t have one already.
- Create a network of trusted professionals: Having tax accountants and financial advisors who grasp your values and financial objectives is crucial. If you don’t already have a rapport with your current professionals, reach out to them and initiate a dialogue. They likely already possess the resources to assist you throughout your journey.
Understanding your financial situation is crucial to the decision-making process as you navigate the complex decision of whether divorce is the appropriate path for you and your family. Armed with knowledge about your finances, you’ll be better equipped to safeguard your interests and make the right decision for you. The steps outlined above are designed to enlighten you about your current financial situation and empower you to negotiate a positive financial outcome for yourself in the divorce.
If you are ready to take a proactive approach to the possibility of divorce and ensure a secure financial future for yourself, reach out to our team at Friedman + Huey. We understand this can be a long and challenging journey, and we are here to advise you on making the right financial decision for you and your family.
