One important aspect of divorce is the ending of the financial relationship between the two parties. For many individuals filing for divorce, the possibility of losing their financial security can be their greatest fear. Knowing how to protect one’s finances during this difficult time is an important step in the divorce process.
Knowledge is Power
Financial protection begins with a full knowledge about the finances of both parties. By remaining informed about the assets, liabilities, and property at issue, individuals can be best prepared for negotiating an advantageous property distribution agreement. It is important to retain copies of account statements, stock option agreements, property deeds, household inventory lists, credit reports, and other financial records when going through a divorce.
Federal law often governs how retirement assets need to be distributed among spouses. Each spouse should have an understanding of any qualified retirement plan that was created or contributed to during the length of the marriage. This can include pensions, IRAs, Roth IRAs, and 401(k)s.
Avoid Joint Accounts
Finances should remain separate after the decision to divorce has been made. Common joint accounts include credit cards, bank accounts (checking and savings), ownership of safe deposit boxes, property holdings, and equity lines of credit. These types of accounts should be cancelled or converted into individual accounts by removing one spouse’s name from the account. If they do not already have an autonomous bank or credit card account, individuals should open these to prevent their spouse from denying them access to funds needed to proceed with the divorce. It is preferable to open new accounts at a different financial institution than the one used by an ex-spouse to avoid any potential confusion or miscommunication.
Monitor One’s Credit
Individuals should check their credit score with one of the established credit agencies (Experian, TransUnion, or Equifax) for any adverse financial effects related to the divorce filing. The best way to protect one’s credit is remove the spouse from one’s account. This can help remove potential liability for an ex-spouse’s debts. Periodic credit checks are important to ensure an ex-spouse has not opened any new accounts in the other spouse’s name.
Designate New Beneficiaries
Many financial documents including retirement plans or insurance policies require individuals to name a beneficiary in the event of death or incapacity. To avoid having an ex-spouse gain control over one’s assets, individuals must remember to designate new beneficiaries following a divorce. Even in states where state law nullifies an outstanding will, designation of beneficiaries in retirement plans and insurance policies will remain unless specifically changed.
Seek Assistance of Counsel
Attempting to navigate divorce proceedings without the guidance of a qualified divorce lawyer can be difficult. An experienced family law attorney familiar with the nuances of state divorce laws can help finalize in writing any agreements regarding the payment of expenses or the distribution of assets previously made between the spouses. This is one of the most important steps in protecting one’s finances when a marriage is ending.
Philadelphia Divorce Lawyers at Freedman & Lorry, P.C. Represent Individuals in Divorce Proceedings
At Freedman & Lorry, P.C., our experienced Philadelphia divorce lawyers handle a wide range of family law matters including those relating to divorce, child custody and visitation, alimony, and child support. To schedule a free initial consultation with an experienced Philadelphia divorce lawyer today, call us at 888-999-1962 or submit an online inquiry form.
With offices conveniently located in Philadelphia and Cherry Hill, New Jersey, we proudly assist individuals and their families throughout Pennsylvania, including those in Bucks County and Delaware County, as well as those in South Jersey. We also have offices in Pinehurst, North Carolina to represent clients in the surrounding area.