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Steps for preparing finances for divorce

On Behalf of | Jul 22, 2016 | Divorce |

One way to get a good sense of where you are going is to start by clearly identifying where you are. This is especially true when preparing for your financial life post divorce.

For many married people, finances are intertwined, and untangling the two is not always an easy task. However, it is important to know where you stand financially before you dig too far into a divorce. This way, you have a clear picture of what your family’s true financial situation looks like. By taking an honest assessment, you will also get a better sense of what may be worth fighting for, but also what may not be worth the hassle.

Step 1: List all assets

Writing down everything you own that is worth anything may seem like a tedious process, but it is a necessary one. It will help you identify which of your belongings is most valuable to you from a sentimental, as well as monetary, standpoint.

Tax records are a great source of truth when it comes to listing assets, including any investments. Especially if you or your spouse owns a business, tax records can show profitability trends, which will come in handy when trying to determine how to split business assets.

Step 2: Get appraisals

With the bulk of your assets listed, it is helpful to get any notable belongings such as fine jewelry, art, or even rare books appraised in order to gain an understanding of how much everything is worth to the outside world. For example, while your spouse may be claiming certain sports memorabilia are worthless, the truth is that there may actually be a rather hefty price tag associated with the items. However, this can also go in the reverse direction and something that you believe is valuable — like a family heirloom — may not be worth as much as you thought, or could easily devalue over time.

Step 3: Hire an attorney

Not all spouses are 100 percent upfront about certain assets. For example, a husband or wife owning his or her own business may suddenly report a drop in income from $150,000 a year to $75,000 a year. Why is this? Has there been a drop in business? Or, is this money being funneled somewhere else in the hopes of not having to split as much in the divorce? An attorney will be able to help uncover the truth of what is really going on to make sure that all assets are on the table prior to any settlement.

This said, not all spouses are out to burn their ex. There are plenty who are honest about all assets and debts. However, an attorney can still help to reach a fair settlement, one that looks at the big picture. The goal is always to set someone up for financial success, especially after the ink has dries on the divorce papers.