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You are getting divorced!  After the emotional decision is made you must address financial situations impacting the family breakup.

What are the major financial pitfalls of a divorce? Are you prepared to stay on top of all financial problems and decisions in this divorce to strive for a financial win-win situation?

1. Where’s the liquid cash? Divorce generally never goes as fast as you would like nor do you receive as much as you think you should! If divorce is imminent start saving up money now! You will need to pay divorce expenses and have support for your new household.  There will be many unanticipated costs that may drain you financially.

• If you don’t have a credit card in your name get one now.  If you share credit with your spouse, close out as many credit cards as possible if he/she can charge on your credit. Even if you don’t use the cards, the account balance will still be owed and both spouses may be legally responsible for the debt.

2. Not Prepared for this Divorce?  Divorce is a serious change of life event. Get Prepared Now! Timing is all important! When is the best time for you to get divorce?  Make sure your financial situation is good before you take the divorce leap. Need new tires, buy them. Kids need dental work, see the dentist.  Just remember: after the separation, your expenses will be paid by court order and not always be to your liking.

3. 3. Where are the important divorce financial records? Don’t leave without all your documents that identify what you and your spouse accumulated during your marriage and which can establish the fair market value! Even if you were not in charge of finances while you were married, you must secure copies of all records. You are entitled to your share of financial property and any additional income you find may increase the earnings that calculate child support or spousal maintenance support.  What are you looking for?  At least three years of tax returns, mortgage paper on your home, wills, trusts, bank, credit card, and financial statements, car registrations and titles, insurance policies, and deeds to real estate.  If you have separate property from inheritance or gifts from your family, make sure you have all records of these transactions.  Our blog, Texas Financial Checklist http://dld.bz/dqcej  is a detailed list of items and records needed to have before filing for divorce. A very good item to use for your preparation!

3. Have you overlooked any Divorce Assets?  If a business is involved a forensic accountant may be hired to look of any signs of additional income or overstated expenses.

• Hobbies and side businesses that use expensive equipment or generate income needs to carefully be looked out.  Are you entitled to compensation for expenses you paid to get your spouse through school?
• All assets, big or small can add up. These assets can always be used for trade on something you can use.
• Your spouse may try to hide assets. By keeping all documents and paystubs to make sure there are not any irregularities, things usually work out fine. Stay honest and reveal your assets.

5. 5. Do Not Ignore Tax Consequences!  Divorce may or may not create taxable events but you must report it on your tax return. Should you sell the house now to claim the capital gain exclusion? Who should be paying the mortgage until it sells? Should you take your spousal maintenance monthly or in a lump sum? What about retirement funds? An accountant can help to determine the best path for you on these questions.

5. 5. Passive Observer of your Divorce? NO!  Get control of this process, focus on practical things and work with your future Ex to get this divorce over! You can do this! There is a reason for this divorce and you are the master/mistress of your destiny. Your children need you now to be a responsible parent and wise decision making will save you time and legal fees. Listen to your attorney but you make the decisions!

5. 5. Is Divorce your survival plan?  Now that you have decided to divorce you must break it to your children. People engaged in a Divorce should be in survival mode.  The person who will be your future “EX” is looking out for themselves and you need to look out for yourself and your children.  YOU must insist within reason on getting what you need and deserve! Emotions and money do not mix!  You must be able to take care of yourself and your family financially so look at all property division decisions very carefully and make good decisions to bring the divorce to a successful conclusion.

5. 5. Prepare for the worst! When entering into a divorce, prepare yourself for the worst!  If you are prepared for anything, than your fears will not cause you to panic and you will keep control of your situation. Outside of death, divorce is considered one of the worst emotional situations that a human being will ever experience!

5. How will you support yourself and the kids after divorce? Hopefully this is not a problem, but now would be a good time to get some career counseling at a community college, university or local job center. Having a fulfilling career is lucrative and helps your self-esteem!

10. Get Good Advice! Decisions you make now will affect the rest of your life.  Find a good, knowledgeable attorney to help you though the rough spots. If you are emotionally a wreck, find a good therapist. If you feel there are hidden assets, hire a forensic accountant. Now is the time to get the best advice you can afford!  You will have to live with your financial decisions for a long time.