Termination of a marriage can be accompanied by a bevy of stressors — perhaps the most notable, ‘what to do with your finances?’ It’s important to be cognizant of your situation, says Rita Mansour, a certified private wealth advisor and senior managing director of Mansour Wealth Management at McDonald Partners in Toledo. She counsel’s to use the resources at your disposal to make this tough time more manageable.
Here are five steps to follow when compiling your financial information while going through a termination of your marriage:
- Hire a financial advisor and an attorney
It is difficult to know where to start when it comes to managing your finances, and that’s OK. Paired with the emotional toll that comes with terminating your marriage, it’s advisable to find a professional who can work with you to create a post-divorce plan. “A lot of people want to bury their heads in the sand because it’s too overwhelming,” Mansour explains. “Typically, people when they’re going through divorce, will make emotional decisions. Having a professional advisor who is objective can help save you from making mistakes.” It’s also important to hire an attorney immediately, Mansour suggests, to guide you through understanding your rights and what to expect with litigation.
- Identify your debts and assets
It’s crucial to identify what debts and assets are held in joint names with your spouse versus individual names. Of course, no one wants to be held liable for something they didn’t purchase. But it’s important to note: In Ohio, “marital property,” or everything that the couple bought together OR separately during the marriage, the law requires that it be distributed equitably when finalizing the divorce. Even if assets are only in your name, generally, they must be divided equally between the spouses. Even separate financial accounts, if the deposited funds were earned during the marriage, or were commingled, are generally regarded as marital assets.
- Gather critical documents
These papers, including financial account statements, income tax returns and insurance policies, are important and will be referenced for legal proceedings, as well as for dealing with post-divorce matters. “If you have children, you should have estate planning documents, wills, trusts, guardianship agreements and financial powers of attorney.” Mansour said. Compiling these documents can help smooth the process and alleviate uncertainty.
- Get a credit report
Securing a credit report — available for free once a year via annualcreditreport.com — can help you understand your financial situation. If your name is not removed from joint accounts and your soon-to-be ex makes late payments, or misses payments entirely, you may still be responsible for ensuring that the debt is paid. Changing accounts from joint to individual status may help to save your credit status. By downloading a report, it is easier to determine where to start.
- Cut back on spending, where possible
This may seem obvious, but divorces can force individuals into financial difficulties, and it’s important to slow spending where you can. Review your bills and your monthly budget, consider any support payments you will be responsible for or receive, and consider cutting non-essential purchases, like premium streaming services, meal kits or other services you don’t use often enough to be considered essential. You can save yourself and your mental health in the long run by being mindful about where your money is going.