Category Archives: Financial Prep
Divorce is a difficult process, emotionally and financially. Before you blindly step into the stressful process, there are steps you can take to empower yourself by getting your financial ducks in a row. Taking the following steps can help make things run more smoothly and even lower your eventual legal bills by being so prepared. According to a recent Fox-Business article, the following five tips are some that every soon-to-be-divorced couple should pay attention to for help easing the process.
Evaluate your assets
The house is the biggest asset that most couples possess but there are still usually many more that qualify as marital assets that will need to be divided. Often people forget about retirement accounts or pensions from past jobs. Other assets people often forget about include stock options, deferred compensation and pension plans. Such assets have values that are paid out in the future, not always simple divisions today.
Tax implications should also be taken into consideration when valuing assets. Just because each party is awarded an equal dollar value in assets, does not mean that down the road the assets won’t have varying tax responsibilities.
To begin, prepare a summary of the last 12 months of all credit card and utility bills as well as personal and jointly held loans. Such a history will help you decide who should take on which debts. It’s important not to take on responsibility for debt associated with property you don’t control. For instance, if you are responsible for paying the car loan, you should be the one driving the car.
Run a credit check and history
Everyone should conduct an annual credit check with all three agencies. Knowing where your credit stands prior to divorce can help prevent headaches down the line. It’s possible that you’ll discover a credit card or line of credit that you never knew existed, correcting inaccuracies is important.
Track how much you spend
Taking stock of your spending habits and creating a realistic budget for your post-divorce life is also crucial. If the cash flow is divided into two, a couple needs to determine if they can they live the life that they live now or if they need to make an adjustment, like selling a home. People often underestimate how much they spend and putting everything down on paper forces couples to face the hard truth.
Identify income sources
Knowing who makes what is critical for determining things such as alimony and child support, if either is a possibility in your divorce. Income derived from businesses or investments should also be accounted for. This is especially important if a spouse is self-employed where hiding money can be more easily accomplished.
If you find yourself facing the prospect of separation or divorce, you need the help of an experienced Knoxville, Tennessee family lawyer. Contact Knoxville, Tennessee’s Benjamin Barnett today.