Financial planning during separation is essential

While finances are an integral part of most divorce settlements, the process of divorce can take some time. Meanwhile, if you and your spouse are living apart, your finances are in limbo. This includes everything from joint bank accounts to mortgage payments and other household expenses to your kids’ needs.

Even if you and your estranged spouse are getting along well enough to work out these things between yourselves, it’s a good idea to have your Massachusetts family law attorney help you work out a formal agreement — particularly if only one person is the wage earner or has a significantly higher income than the other. That way you have some assurance that necessary expenses will be covered even if the divorce turns rancorous. This agreement can also help as you determine what type of settlement to seek in the divorce.

This involves some budget planning. If you’re going to be living separately during the divorce proceedings, as most people do, you each need to create separate budgets to cover your housing, food and utilities. Unfortunately, some couples need to stay together under one roof for a while because they simply can’t afford two households. However, if that situation is untenable, it’s best to work out a way to manage two homes, even if it means cutting back on other spending.

It’s best to start separating your bank accounts as well as your credit cards and other debt. As long as your name is on a credit card, he or she can go on a spending spree and leave you with responsibility for repayments.

The same is true for your assets. If you have a joint checking or savings account, your spouse can empty it out and leave you with nothing. Most people think this will never happen to them, but there’s no reason to take unnecessary chances. You have to start thinking about protecting yourself.

Many divorcing people seek guidance from a financial advisor to help them navigate the financial aspects of their separation and divorce. Your family law attorney can likely recommend someone in your area who helps newly-separated or divorced people as they become newly financially independent.

Source: NerdWallet, “3 Tips for Managing Your Money While Separated From Your Spouse,” Shawn Leamon, Sep. 21, 2016

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