By Reid Elkus
Divorces take a toll – not only emotionally, but financially. There are steps you should follow to protect your assets during divorce process and also to ensure that the division of assets is fair and the settlement makes sense financially.
Take Steps to Protect Your Assets
Sometimes, especially if a particularly hostile divorce is anticipated, you should be proactive to protect your accessible financial resources – you may need them during the divorce process. Withdraw your share of any money (less any bills currently due) in your joint accounts and deposit these funds in a new account that is in just your name in a different bank. Then either have your name removed from any joint accounts or close the joint accounts (and consider giving your spouse his share of the money). If there is already a restraining order preventing making a change in any bank accounts then you should monitor the accounts to make sure your spouse is abiding by the order and if he does not you could threaten him with a contempt proceeding. Also, take any of your own personal property that is valuable and put it in a safe place.
Consider Getting Representation
In other words hire a divorce attorney, and do so as soon as possible. Ask around and hire the best divorce specialist you can. Also, in cases where there are significant or complex assets a Certified Public Accountant will be needed. The valuation and division of the property, assets, investments, debt and income potential can be tricky and may be contested, so make sure you have an expert on your side.
Identify Available Financial Resources
A divorce can be expensive. Identify the financial resources that you have available. You will need enough to support yourself during the divorce process and to pay for the professionals you have hired to represent you. Those resources may include your share of the joint property and your separate property. Your financial assets may include your savings account, stocks, bonds, or mutual funds, a line of credit or mortgage on your real estate, your retirement fund, and personal loans from family and friends. Do your best to make sure all current bills are being paid during the divorce process.
Talk with a CPA or your financial adviser about the tax consequences and other implications of selling stocks or mutual funds, borrowing against the funds in your retirement account, or taking a second loan on the real estate you own.
Inventory Your Assets and Liabilities
List your assets and their value. Your divorce lawyer can help in making sure there is a full disclosure of all assets owned and debts owed by you and your spouse. This may include “non-marital” assets such as gifts and inheritances. The value of these assets may affect the negotiations in a settlement. While you may be emotionally attached to some assets, it is important to remain objective in order to make the right financial decisions considering your personal situation. Also, your CPA can explain the risks and potential tax consequences of retaining or giving up certain assets.
Protect Your Credit
First, obtain a credit report to determine your credit status. Look for new sources of credit your spouse may have recently opened. If you have joint credit accounts, such as credit cards or lines of credit, take steps to remove your name or close them. Inform your spouse of what you are doing. Again, if there is a restraining order limiting changes to the cards then you will need to monitor the use of the cards. If you can’t close a joint account because of an outstanding debt that cannot be paid off, write the creditor to explain that you won’t be responsible for any additional new charges on that account. Begin to establish your own individual credit, which would include obtaining a credit card. This may come in handy to pay your legal fees and other bills while your accounts are tied up.
Change Legal Documents
While married you and your spouse may have made a will together and probably designated each other as the beneficiaries on any life insurance policies. Once the divorce proceedings have been initiated the beneficiary designation on those policies most likely cannot be changed and the policy will be included in the marital assets. The divorce decree will decide who owns the policy. This would also apply to any IRA accounts which either of you have. But, there does not seem to be any restrictions concerning changes to a will. Consult your attorney about making changes to all estate planning documents including your will, a durable power of attorney and a health care proxy.
Reid Elkus is a Denver, CO family law attorney and one of the founding partners of the Elkus, Sisson & Rosenstein, P.C. family law firm. Mr. Elkus is dedicated to providing his clients with the best possible legal representation by making sure to only handle one case at a time, allowing him to commit the amount of time and resources that are required for a successful case. Contact Mr. Elkus at the Elkus, Sisson & Rosenstein, P.C. for a free legal consultation.
Photo Credit: 2014© www.clipart.com