The financial aspects of divorce aren’t always considered before filing. Texas is a “community property states,” meaning marital assets, properties and monies are divided between the two parties, not always equally. But once the divorce is over, and the judgment has been signed, you’re starting over on your own, and possibly with your children.
The time to ensure that your financial outcome is favorable is before you file, and during the divorce process. If you start looking at your financial wellbeing after the divorce is final, it’s too late. Avoid making severe financial mistakes in a divorce that impact you long-term.
Don’t Neglect Your Budget
What your new life will cost? Consider what you spend now, what you’ll be spending in the future, and what you’ll be able to do on your income.
Answer questions like:
- Will the family home be kept or sold?
- Can you afford to keep it by yourself? Remember that there are also things like taxes, insurance and repair/maintenance that you’ll also have to cover.
- If you don’t keep the marital home, will you buy a new property, or rent for a while? What can you afford? How close is it to your workplace? How long will your commute be?
- What new expenses will you be responsible for on your own?
- Do you have a vehicle, or will you need to buy one?
- What about your children—will they go to a public school or a private school?
- If you have primary custody, how much will the other parent be contributing to their school or other needs?
- Can you afford to do without child support if he or she doesn’t pay?
Since your lifestyle will change, especially if you have children, strictly adhering to your budget will help you keep control of your finances.
Hire a financial planner to help you through the immediate future and review any financial settlements can help you with long-term decisions and investments. If you are planning to sell your marital home, or sell it sometime in the future (after the kids have moved out), you’ll also need to consider the costs involved with selling the home (or liquidating other assets.)
- If your spouse is trying to convince you to take an investment in lieu of something safer, like cash or other liquid assets, make sure you talk to a financial advisor to make sure it’s in your best interest. Other investments may be risky, or not provide the return you’ve been promised.
Review All Your Financial Documents
Bank accounts, credit cards, mortgage documents, deeds, investments and other assets, and literally anything else that’s financial in nature. These will be included in your divorce, and you’ll need to find them anyway. Know what you have before you get started. It may be a long and difficult read, but you’ll be better prepared. This is especially important if you think your spouse is hiding any assets.
Deal With Joint Debt
The two basic kinds of debt are:
- Secured debt, such as a mortgage or an auto loan
- Unsecured debt, such as credit cards, student loans, and store finance accounts
Secured debt means just that—with collateral. A house or car can, in most cases, be sold to recover if you stop paying, but not an unsecured debt. Both types are shared if acquired during the marriage. The debt can be divided, but a credit card company won’t care about your divorce decree.
If one party doesn’t pay the bill as agreed in the divorce, the lender can still come after you for the balance. If you sign over your interest in the marital home to your spouse, make sure your name is removed from the mortgage, deed, and all other paperwork. Best option: pay off all the marriage-related and close out all joint accounts debts before filing for divorce, especially credit cards.
Retirement Accounts Are Assets, Too
Accounts like 401(k)s and IRAs that were funded during the marriage belong to both parties, whether or not both names are on them. Pensions are considered “indirect income,” so they are also considered marital assets. They’ll be divided, and administered on retirement.
Although these accounts will be divided, it may not be an even split. Factors like age, health, earning capacity and other factors will be used when dividing the accounts. You’ll also need to obtain a Qualified Domestic Relations Order, with the other spouse as an “alternate payee” in order to receive funds from the pension plan.
Don’t Give Up!
Your spouse may be dragging out a divorce to wear you down and hope you decide to take whatever they’ll give you. You may decide to just get it over with and agree to anything. Don’t! You could be walking away from thousands of dollars you’re entitled to under community property laws. You can’t go back and change it. Don’t be the one who wonders why you ever agreed to something you regret later.
Contact Fort Worth’s Compassionate Divorce Attorney
Wendy L. Hart is an experienced family law attorney helping people throughout Tarrant County who need help in a divorce. As a divorcee herself, Wendy understands the process as well as the difficulties involved. We represent both men and women. We’ll make sure you’re treated fairly and will protect your interests and your children.
Visit our Mansfield office, use our online contact form, or call us at (817) 842-2336. We’re ready to help.