How to Protect Your Money During Divorce

woman using calculator to assess finances
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Aside from your children’s welfare, protecting your money during your divorce will need to be an important focus. Money is the one issue you can start protecting and preparing for long before you file for a divorce.

If you suspect your spouse of hiding money, if you think the separation and divorce will be acrimonious and riddle with conflict, you need to take precautions with your finances in advance of filing for a divorce.

First, here's an important note for stay-at-home moms: “Your money” is the money your husband earns to keep the household afloat. When you both agreed that you would stay at home to raise the children there was an implied agreement that the one income would cover the expenses of both spouses and the family. Therefore, if you end up divorcing, don’t think that because you don’t earn a separate income that you have no money to protect. 

You and your children will need to be financially secure until you can go back to work, that means you being willing to protect what portion of his income you need to remain financially viable after the divorce is final. 

Tips for Protecting Your Assets During a Divorce

Here are the best ways to protect your money when divorcing.

Open Personal Banking Accounts

If you don’t already have a bank account in your name alone, open both a checking and savings account. Inform your spouse when you do so and give them an accounting of how much money you will be depositing in the accounts. You want your spouse to be aware of these accounts so you won’t be accused of attempting to hide marital monies.

Once you separate and file for divorce you’ll need cash to cover attorney fees, court fees and, if necessary a new place to live. A good rule of thumb is to not file for a divorce until you have enough money for legal fees and living expenses to last at least 3 months.

Close All Joint Credit Accounts

Pay down and close all joint credit accounts you and your spouse hold together. Whether it is a Target credit card or a home mortgage, credit accounts need to be paid off if possible or, put in one or the other spouse’s name alone.

If you aren’t able to pay off the credit accounts talk to your creditors and find out what steps need to be taken to have your name removed from the accounts. When you go to divorce mediation or divorce court, all debts will have to be split during divorce settlement negotiations. The fewer debts you have, the less stress during negotiations. 

If you don’t work or have an income, encourage the income earning spouse to help you remove your name from all joint accounts. If need be, you can negotiate the split of debt by promising to take on a portion of the marital debt once you are working and earning a living wage. 

To protect money or investments held in joint accounts, you can also withdraw half of the money. If you withdraw all of the money the court could order you to give half back. Another option is to change the signature authority on any joint account so that both of you must sign in order to complete a transaction. Instead of Mr. or Mrs. the account will read, Mr. and Mrs. And require both spouse’s signatures before monies in the account can be used. 

Protect Your Valuables

If you are in an abusive relationship or believe your spouse will destroy or hide valuable possessions hide them. Keep in mind, though, any valuables you have that were purchased with marital funds will need to be valued and split during the divorce process. 

What you want to do is protect valuable assets but not hide the fact that they are in your possession. When you file a list of marital property with the court, make sure you list any valuables you’ve removed from the home. Do not sell any valuables if you need cash. If you do so, you will have to pay the monies back during divorce settlement negotiations. 

Don’t Incur New Debt

What you want is to save as much money as possible before you file for a divorce. Running up charges on a credit card isn’t saving money. Once you’ve gotten your name removed from that Target credit card, cut it up. It’s cash from here until your divorce is final. Keep a wise head and save for the future so you don’t begin your new single life with overwhelming credit card debt. 

Request a Copy of Both Credit Reports

You want to know, not only how your credit looks but the same for your spouse. Do they have open credit accounts in their name alone that you had no knowledge of? Have they made foolish decisions that negatively impact both yours and their credit report? If there are issues with the credit reports, you can go to working cleaning yours up if you have copies of both credit reports.

Get a Post Office Box

You don’t want your new banking information or, anything else related to your desire for a divorce to go to an address where it can be intercepted by your spouse. To protect your privacy and keep your spouse from getting their hands on important documents, set up a PO Box and have your mail delivered there. 

Document Before You File

You want to get evidence of valuables and cash sources before you file for a divorce. Take pictures of marital possessions. Did you buy an expensive Grandfather clock during a vacation in Germany? Take a picture! Along with pictures of possessions, make copies of bank account and investment account statements. Keep all these pics and documents in a safe place away from the home.

Get Job Training Before You File

If you’ve been a stay-at-home mom and have no marketable skills, go back to school before jumping into a divorce. You can protect your future earning potential by making sure you have future earning potential. Don’t make the mistake that you will be able to live off child support and alimony while you go back to school.

Alimony laws are changing drastically. Today, you will receive very little for a very short period of time. 

Get Rid of Financial Power Imbalances

If your spouse has always been in charge of paying the bills and keeping up with the finances, this needs to change. Knowing exactly how much money comes into the household and where it goes out to puts you on level footing with your spouse once you file and start negotiating a divorce settlement

Know the Value of Pension and Retirement Accounts

Retirement funds are usually a couple's biggest marital asset. Familiarizing yourself with the value of both your and your spouse’s accounts and how they are divided during divorce according to your state’s divorce laws puts you in a better position, one of not being taken advantage of during divorce settlement negotiations

 Don’t Ask for "Alimony"

Alimony is taxable income. Try to come to an agreement that doesn't label payment from your former spouse as "alimony" in the legal paperwork. If it is not listed as alimony in your final decree of divorce, you don’t have to claim it as income at tax time. So, once the divorce is filed and negotiations have begun, pay close attention that alimony is not listed as part of your final divorce decree. 

Divorce shakes up your emotions and can cause you to make irrational decisions when it comes to finances or, any other aspect of the divorce process. If you’ve taken proactive steps to protect your money before you file for a divorce it only makes sense that you will be better prepared to make rational decisions about your finances during your divorce. Decisions you won’t regret 5 years down the road.