How to organize your finances before a marriage or divorce


Divorce comes with many emotional stresses, but the financial changes can have a big impact on your life, too. Suddenly, your income changes, your division of bills changes, and your financial responsibilities change. Marriage, while in every other way the opposite of divorce, also comes with big financial changes. Suddenly you must learn to share your financial responsibilities with another person. Getting your finances organized before your marriage or divorce will help you know where you stand individually, which can help you navigate new financial waters in the future.

Step one: Get Organized

Mike Schiffman of Schiffman Family Law says that before beginning the divorce process, it’s essential to have an accurate understanding of your financial situation — your own, and your family’s. “No one knows your financial circumstances better than you,” he says. “Your divorce attorney’s job is to help you understand how your divorce will affect your financials, and figure out what path to separation is right for you.”

He recommends all of his clients organize their financial documents before a divorce by using separate files for each account. Printing out documents that track all money in both joint and separate accounts makes it easy to see what money is yours, and what is shared. Not only does this give you a clear picture of your financial situation, he says it helps make things easier during the divorce process.

“When you begin the divorce process, you and your spouse will need to exchange numerous financial details related to your bank accounts, investment accounts, retirement and credit card accounts,” Schiffman said. “If you are organized, the process of providing such documentation will be less overwhelming.”

Before a marriage, Financial Advisor Kristin O’Keeffe Merrick writes in Forbes that frank conversations are important. “If you get divorced and either one of you has debt, it could become your responsibility. So before you take the plunge, it is crucial to have an open conversation and get your financial ducks in a row.”

Merrick recommends discussing how you will organize finances together after your wedding, including budgeting and financial goals. If your own finances are organized ahead of time, it will make it easier to have realistic conversations about what you can afford and what you hope to achieve with your money. It will also make it easier to tell your partner about any debt you’re bringing to the marriage.

Step Two: Check Your Credit

Whether you’re getting married or divorced, check your credit score. Knowing your score before marriage will help you avoid any surprises when you and your spouse try to buy a home or make another investment together. If there are issues on your credit report, try to resolve them or talk to your spouse about them to keep them in the loop about the types of homes, cars, etc. you will be able to jointly afford.

If you’re getting divorced, check your credit to see if your spouse’s financial history has impacted you in any way. Now that you’re on your own, it will be important to have a strong independent line of credit for future loans or rental agreements. Look over any joint credit card statements and see where your money is being spent, making note of who’s responsible for each major expenditure, and identifying patterns in your own spending and your partner’s. If your spouse spends excessively, take your name off the account to start building your own credit before the divorce goes through.

Step Three: Set Up New Accounts

After divorce, you’ll have to set up individual bank accounts and credit cards, so why not start early? Establishing your own accounts in advance lets you move your money so that you can track your spending and begin building credit.

For those getting married, it’s not a bad idea to keep your accounts separate. In fact, more and more millennials are doing it, according to The Atlantic.

Step Four: Taxes

This one only applies to those going through divorce: Your tax status will change from joint to individual, and your income will change, too. These are big shifts that could result in paying or receiving spousal support or capital gains taxes and other investment taxes. Forbes recommends working with a certified divorce financial planner who can help you understand how taxes will impact your divorce settlement, and how to best negotiate to save you money.

Organizing your finances can seem like a daunting task, but it will save you time, energy, and maybe even money in the long run. It’s great to start taking inventory of your assets on your own, but the earlier you partner with an experienced divorce attorney, the more help you’ll have navigating these complex waters. At Schiffman Family Law, we have more than 30 years’ experience helping people understand and take control of their finances during divorce. Contact our office today for a free one-hour consultation.