“All good things must come to an end”, originally penned by Geoffrey Chaucer and a frequently used proverb today, can be interpreted as having positive and negative meanings. Isn’t divorce much the same? The mere thought of divorce may cause a wide array of emotions to surface, including relief, fear, disappointment, excitement, dread, frustration and loss. Divorce is never easy and can send you into an emotional tailspin. Regardless of how you feel, you will have to make some decisions that aren’t exactly within your comfort zone. One of the most uncomfortable discussions will be in regards to your finances. Before you plunge into divorce, make sure you have prepared yourself for all possibilities. Here are a few tips to ensure you know how to handle the financial discussion during your divorce case:
- Copies, copies, copies! Keep copies of every family financial record you can find; canceled checks, bank statements, tax returns, life insurance policies, etc. Rule of thumb, if it has to with money – make a copy or two. Maybe even three! You may never need this information, but if you do, it’s good to have it.
- Assets, assets, assets! Learn everything there is to know about your family’s financial situation. Remember, as you wind your way through the divorce maze, you will only be able to share in assets you can prove, so you must find out exactly what you have acquired during the marriage. For most, that’s probably easy. There’s a house, a car, a pension, and a little bit of savings. But for some, property ownership is more complicated so keep accurate records.
- Money, money, money! Learn your spouse’s annual income. If he or she has a salaried position, or is paid by the hour, the information should be on a recent pay stub. If you can’t get your hands on one, last year’s tax return should do. If your spouse is self-employed, a tax return may not tell you the full story. You may have to do a little detective work to know if your spouse is hiding assets or not. If you haven’t discussed your plans to divorce with your spouse yet, be sure to put it off until after you have managed to obtain as much financial information as possible.
Jeff Landers, a Forbes Contributor, writes extensively on the subject of financially complex divorces. Mr. Landers penned an article titled “If Your Husband Owns A Business, Watch Out For SIDS (Sudden Income Deficit Syndrome) Once Divorce Proceedings Start”. In this article he describes red flags of the self-employed/business owner hiding assets as:
- The business is supposedly in trouble, but his lifestyle does not reflect a loss of income.
- The business pays his personal expenses.
- His loss of income began just as your marital troubles were intensifying.
- He stalls or stonewalls when asked to turn over financial documents or allow a business valuation.
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Just as a runner trains to prepare for a marathon, you must train your mind & prepare yourself for a divorce case. During your case, you can be faced with many hurdles to jump. The better prepared you are ahead of the race, the easier to tackle the obstacle course.