Planning for a divorce is a tricky concept.
Some men find themselves in a miserable marriage where it seems impossible that things could be worse post-divorce. This “divorce fantasy” causes them to believe everything in their life will remain the same after divorce except their partner will be gone. Reality is much more complicated than that.
On the other hand, some men find themselves struggling to do everything possible to save their marriage. When those efforts come up short, they often find themselves unprepared and at a huge disadvantage entering the divorce process because they failed to take necessary steps to protect their assets.
“If they can anticipate and plan … there are a variety of moves that can be made that can actually benefit them substantially in the divorce process,” said Cordell & Cordell Principal Partner Joe Cordell.
This is a fine line to walk, but when divorce is an option you’re considering, there are questions you need to ask and steps you need to take to make sure divorce is the right decision and that you are prepared for life-after divorce.
Here are four ways that you can realistically plan for divorce.
Sign a pre-nuptial agreement.
This is a decision you make before you even get married. Unfortunately, it is uncomfortable for many couples to discuss because it acknowledges the possibility of a divorce in the future.
However, contrary to popular belief, pre-nuptial agreements are not precursors to divorce.
Signing one doesn’t mean a couple has doubts about their love for each other. It simply shows they are honest and mature enough to have a rational discussion that can potentially protect both of them from financial problems down the road. This might be the single most effective way to safeguard yourself financially from divorce because a pre-nup can protect nearly every kind of asset.
Consider how divorce will impact you and the people closest to you.
Once you encounter serous struggles in your marriage and start considering divorce as a realistic possibility, you need to take a step back and consider how many people will be impacted by the decision.
This is particularly important if you have children. Is it worth splitting up when it is proven that divorce can have very serious negative effects on children?
You personally could also face increased health risks following divorce.
Even non-family members could potentially be affected. It is natural for work productivity to slip during divorce. If you’re working on an especially important project at your job, deciding to divorce at this time could adversely affect the people you work with.
Prepare a post-divorce budget.
It is extremely difficult to recover financially once you split your assets in a divorce. Your post-divorce lifestyle is probably going to look drastically different from what you’re used to, especially if you have children.
You will now likely be paying child support and potentially covering two sets of living expenses.
Calculate your expected income and living expenses. Take into account potential child support and spousal support payments. Use the DadsDivorce Child Support Calculators to estimate how much you will have to pay in your state.
You also need to look ahead several years and consider what your long-term financial goals are. Will you be able to reach them after going through the financial strain of divorce?
If you do divorce, you will need to make some significant financial adjustments. There are quite a few smart-money tips that can help you stretch your money further than before.
Protect your assets.
Once you’ve fully considered all the ramifications of divorce and decide there is no other option, you need to do whatever you can to protect your assets.
Unfortunately, many people only consider asset protection after being served with divorce papers, by which point it is too late to shield your assets.
Typically, unless you have a pre-nup, all assets acquired during the course of a marriage will be considered marital and subject to equitable division during divorce.
In order to protect your separate assets, you need to gather information that shows that your separate property does indeed belong solely to you. Think about what you would need to show a judge to prove that an asset or account is yours. If it is a car or house you purchased before marriage, a title or deed will suffice.
Accuracy and thoroughness on financial documents is also critical since all bank accounts, credit card accounts, retirement accounts, and investments will be valued during divorce. At the minimum, you need to copy the last five years of your tax returns, the last year’s worth of bank and credit card accounts, investment statements, and retirement statements.
Most attorneys also recommend starting a separate bank account. This is a touchy subject because you should not tell your spouse that you are opening a separate account, but you will be required to disclose the account. Remember, you’re not trying to hide your money, but protect it so your wife is unable to withdraw what you’ve earned.
Generally, it is a good idea to open the account before filing and deposit enough money to pay the family bills into the account a day or so before filing.