Preplanning Divorce Strategies
By Maury D. Beaulier
Mar 8, 2006, Wed, 8 Mar 2006 00:11
Preparing for Divorce
Nobody marries with the expectation of failure. Married couples
never contemplate that the person they once loved could later seem
to be a stranger and perhaps even an enemy. Yet, statistics paint
an ugly picture. Approximately five out of 10 marriages today end
in divorce. In divorce proceedings, women lose financially, their
standard of living may drop as much as thirty percent in the first
year following a divorce. Men, may not suffer as great financially,
however, they tend to lose precious time with their
children.
One of the greatest contributors to divorce is the issue of
"control" - either financial or personal. Who controls the bank
account? Who sets the social agenda? When one partner to a marriage
"controls", the other partner loses their sense of self. A divorce
becomes imminent as they controlled partner tries to regain their
self-esteem.
In a divorce situation,
even the most cooperative of couples may be transformed into warring
parties. It that does occur and you are not prepared, you can be
sure that you may lose out on contested divorce issues.
Your goal must be to be prepared and be
ready to present strong arguments as part of the divorce. This
always requires pro-active planning. Below are several
simple and logical ways to protect yourself financially if you
believe your marriage is in jeopardy:
ONE: Keep Non-Marital Assets
Separate
Non-marital assets are not
part of the assets divided in a divorce.
Instead, they are considered the asset of either the husband or the
wife and generally awarded to that person in a divorce proceeding.
Categories of non-marital assets include:
-
property you inherit;
-
proceeds from personal injury awards (eg. Worker's
compensationor accident proceeds);
-
items owned prior to marriage; and
-
gifts to one party rather than the family.
If
non-marital assets are commingled with assets purchased or improved
during the marriage, it may not be possible to claim the asset as
yours in the event of divorce. However, some "tracing" of
non-marital assets may be possible. For example, if a non-marital
asset is sold during the marriage and the proceeds from the sale are
used to purchase another asset, it may be possible to "trace" a
non-marital interest in the new asset. For example, if a car owned
before a marriage is sold during the marriage and the proceeds used
to purchase a new vehicle, a party may be able to claim a
non-marital interest in the new vehicle. To do so, it is very
important to retain all documents demonstrating the sale of the
asset and the use of the proceeds realized from
the sale.
TWO: Establish Your Own Credit
Make sure
your name is listed on all household accounts and investments.
Establish at least one credit card in your own name. This will help
to create an individual credit history. When you are on your own,
you will have a better chance qualifying for loans, mortgages and
credit cards. These are all important considerations after a
divorce.
THREE: Review Your Financial
Holdings Regularly
Maintain complete and separate records of your
financial holdings such as bank accounts, IRA's, 401K, land
purchases, and stocks.
This includes assets in
your spouse's name as well. You may wish
to maintain copies of
these records at your place of employment or
in a safety deposit box
in your name. Records have a way of
disappearing after a divorce has been
started.
FOUR : Time Your
Divorce
The timing of your divorce
may carry with it a significant
financial impact.
For example, in a single income family,
the non-working spouse may not
have earned enough money to qualify for
Social Security at the age of
retirement. However, if spouses
are married at least 10 years
and don't remarry, the non-earning
spouse may qualify for Social Security
benefits based on the
ex-spouse's
earnings when both reach the age of 62.
FIVE: Close Joint
Accounts
If a divorce is imminent, you should
immediately contact
joint-credit-card companies in writing to freeze or cancel your
joint accounts. You do not want
to be responsible for your
spouses' new credit card charges, particularly when those charges
may include attorney's fees.
This protects your credit. It is
important to remember that, although a
creditor may freeze a joint
account, the outstanding balance must be paid off before the
account can be closed.
You may also wish to close your joint bank accounts. If any
proceeds are removed, keep a carefully
accounting where the money is
placed or how the proceeds are spent. You will undoubtedly be asked
for that accounting as part of the divorce process.
You can
save yourself
time and money by keeping accurate records.
SIX: Video Tape Assets
You
should photograph of videotape the contents of your home including
any garages, sheds or out buildings, to record the assets and
fixtures contained in each. In any divorce, it is possible that one
party may be required to relocate from the family residence. Once
you relocate, it may be difficult to recall all of the assets and
furnishings that are contained in the house. If you forget them,
there is a good chance that they won't be factored into the values
that each party
receives in the property
settlement.
SEVEN: Do Not Leave
the Marital Residence.
In a custody case,
leaving the marital residence may impair your ability to
successfully seek custody of the children or an award of the real
estate after the divorce. By relocating, you create a sort of
status quo that courts are often reluctant to disturb.
EIGHT: Cancel Joint
Credit Cards & Separate Debt.
If a
divorce is imminent, you should immediately contact
joint-credit-card companies in writing to freeze or cancel your
joint accounts. You do not want to be responsible for your spouses'
new credit card charges, particularly when those charges may include
attorney's fees. This protects your credit. It is important to
remember that, although a creditor may freeze a joint account, the
outstanding balance must be paid off before the account can be
closed.
NINE: Collect
Information Related to Children.
In any case that involves children,
custody disputes are a distinct possibility. As a result, documents
relating to your children may be critical to support your contention
regarding medical issues, care during the marriage, or who was the
parent providing their primary care. Some items you may wish to
obtain or retain include:
-
Family photographs including those
depicting family vacations or the children's extracurricular
activities;
-
Social Security, Student Body, and
State ID cards;
-
Medical records and prescription
information including the names and addresses of any treating
physicians or counselors for the children or the parties;
-
Report cards and school records.
TEN: Hire an
Experienced Divorce Lawyer
It may be very important to hire a good lawyer early in your divorce
planning process. An experienced attorney can help you avoid
mistakes that could later cost you in your divorce proceeding. By
choosing an attorney early in the process, there is less of a chance
that you will be caught off guard and wind up playing catch up on
the issues.
There are
many lawyers to choose from so it is important that you ask
important questions in order to choose one that is knowledgeable and
right for you. Ask about their experience in family practice and
specifically divorce. Ask the attorney to explain the legal issues
as well as the legal process in your particular county.