An impending divorce can be devastating, emotionally and financially. But if a marital split is in your future, here are four steps you can take to help protect your money and avoid potential financial disaster.
1. Review your bank statements
Before you can protect your finances, you’ll need to have a good idea of how much money you and your spouse have. You can begin by printing statements from financial accounts, including checking, savings and retirement investments. For bank statements, you can do this from home if you use online banking.
You might also need to open new accounts in your name only, or change passwords for existing accounts that are in your name only. Be sure to get the advice of a lawyer before taking any major steps.
2. Add up your assets
In addition to reviewing your bank statements, you’ll also want to get a good idea of the value of property you and your spouse own. Knowing the value of marital assets you or your spouse acquired during the course of the marriage can help you ensure that they get divided fairly. Consider taking photos of collectibles and artwork to create an inventory.
If you and your spouse own a home, it can be difficult to decide who will remain, or whether the home will be sold. This decision might not be made for a while, so don’t plan on making any sudden moves without the advice of a lawyer.
3. Pull credit reports
Along with adding up the marital assets, you’ll also need to figure out marital debts. You can get one free copy of your credit report annually from each of the three major reporting bureaus, which can tell you how much debt you have and let you see whether any new joint accounts have been opened. Some financial institutions, such as Frankenmuth Credit Union, offer identity theft protection that provides daily credit file monitoring with automated alerts of any key changes to your credit reports, as well as online access to your credit reports and broader ID security checks.
If you and your soon-to-be-ex can pay off all joint credit accounts and close them, it could protect you in the long run from an unexpected use of credit. If that’s not possible, your attorney may suggest freezing the accounts to keep them from being used until the divorce is finalized.
4. Open credit in your name
If you’ve been letting your spouse handle all the finances, you might not have your name on credit cards, mortgages or loans. But if you’re going to start a new life on your own, you may need proof of a good credit history to get approved for a new home, for a car or for other purchases. You can establish credit history responsibly by contacting your financial institution about opening a new credit card or other type of loan.
Going through a divorce isn’t easy, but it’s important to pay attention to your finances throughout the process. By counting your marital assets, figuring out your debts and establishing your own credit, you can take steps to protect your money and your financial well-being.
Margarette Burnette, NerdWallet
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