Divorce is often thought of in terms of its emotional impact, but it can also bring significant financial challenges. Transitioning from a dual-income household to managing expenses on a single income, especially with children, can feel overwhelming. That’s why divorce financial planning is a crucial part of preparing for this new chapter.
To ensure you receive a fair property settlement and appropriate support payments, it’s essential to have detailed financial records ready. With proper divorce financial planning, you can take control of your financial future and navigate the process with greater confidence. In this blog, our Austin divorce attorney shares key steps that you need to know if you are preparing for divorce.
Key Takeaways
- Divorce financial planning is essential to ensure a fair property settlement and appropriate support payments.
- Begin by gathering detailed financial information and creating a realistic budget.
- Take stock of all assets and property, including any potential hidden assets.
- Consider seeking professional help from a certified divorce financial analyst and tax professional.
- Open new financial accounts in your name only, but consult with your attorney before doing so.
- Create an emergency fund to cover immediate expenses during the divorce process.
- Plan for tax changes that may arise from the divorce.
- Schedule a consultation with an experienced Austin divorce attorney as soon as possible to protect your financial interests.
Financially Preparing for Divorce in Texas
Each situation is unique. Therefore, when you meet with an Austin divorce attorney, they will advise you on specific steps you should take to protect your finances and prepare financially for a divorce. However, steps you can take now as you prepare to meet with an attorney to discuss a divorce include:
Create a Budget and Gather Financial Information
Begin by gathering financial information, such as information and balances for bank accounts, retirement funds, income, debts, and expenses. Take stock of your financial situation, including the resources available now and after a divorce.
Create a realistic budget for what you will be responsible for paying when you file the divorce action and after your divorce is complete. Do not leave anything out or underestimate expenses. You need an accurate picture of your ability to support yourself and your children, even if that picture is bleak. An accurate budget helps you assess whether you need spousal maintenance or alimony.
Inventory Your Assets and Property
Take stock of what you own and what it is worth by creating an inventory and appraisement. Include all property you own separately and the marital property subject to property division. Attach copies of titles and other evidence of ownership and value to the inventory for reference.
Tell your attorney immediately if you believe your spouse might be concealing assets or disposing of property. Your attorney can take steps to uncover hidden assets and stop your spouse from depleting marital property.
Seek Professional Help From a Financial Advisor
High-net-worth divorces can be challenging. Support obligations and property division can be more complicated and significantly impact a spouse’s tax obligations. Consider consulting a certified divorce financial analyst and tax professional as you prepare financially for divorce. However, do not discuss the divorce with your current advisors because they also have a fiduciary duty to your spouse.
Setting Up New Financial Accounts
You may need to open new bank accounts, credit cards, and other financial accounts in your name only. A divorce lawyer can advise you of the best timing to take this step and your rights regarding marital property. You do not want to be accused of accruing marital debt or concealing marital assets by transferring funds to an account in your name only.
Create an Emergency Fund
Do you have enough money to pay for your household expenses if your spouse suddenly cuts off access to joint accounts? If not, start setting aside money in a separate account that only you can access. This fund will help cover immediate needs and expenses as the divorce process unfolds. Even if you ultimately receive spousal support, there may be delays before the court orders it or before you receive it from your former spouse.
Plan for Tax Changes
Divorce may affect your taxes. For example, spousal support is tax-deductible for the payor and taxable income to the recipient. If you have children, discuss filing status with your divorce attorney since only one parent can claim a child as a dependent for federal income tax purposes. Also, consider changing beneficiaries on life insurance policies, retirement accounts, and other financial accounts if appropriate.
Update Your Estate Plan
Think about what happens if either you or your spouse passes away before the divorce is final. Update your will and other estate planning documents to reflect your wishes. If you have a revocable trust that names both of you as trustees, discuss changing the terms with your attorney. You might also want to update beneficiary designations for insurance policies, retirement accounts, and other financial accounts.
Schedule a Free Consultation With Our Austin Divorce Attorney to Learn More
If you are considering a divorce, the best way to protect your present and future financial stability is to seek legal advice as soon as possible. You need to determine how your assets and liabilities will be divided and determine support arrangements.
Contact the Law Office of Ben Carrasco to schedule a free consultation with an experienced Austin divorce attorney. Our legal team will help you prepare for divorce and protect your financial interests. With our guidance, you can navigate this challenging process with confidence and emerge ready to start a new chapter in your life.
