Everything you own will need to be cataloged and split up between you and your spouse during divorce. Yes, everything.
Getting a jump on figuring out what you have will help you divvy up what's yours, theirs, and "ours". It also helps you assess what your true financial holdings are, anticipate what assets you'll want to keep, what assets you're willing to part with, and which assets should be tagged as individually owned and kept separate from the marital assets you and your spouse jointly own.
Here's a big asset question I get asked all the time:
"Why should I catalog my assets before meeting with a divorce attorney or financial planner?"
The reason you need to get a list of your assets together early in the process is that without figuring out what you have, and what it's worth, you can't fully understand your financial holdings. So the sooner you get an accurate assessment of your assets, the better position you'll be in when discussing your finances in meetings with divorce attorneys, mediators, CPA's and financial planners.
Next question I commonly get is:
"What is an asset?"
An 'asset' encompasses anything that an individual or business owns, which holds monetary value and can be converted to cash. Generally, assets manifest themselves in four main forms: liquid, illiquid, tangible, and intangible. Liquid assets, such as bank deposits, can easily be turned into cash, whereas illiquid ones, like real estate, might take longer to convert. Tangible assets, like properties or vehicles, are physically touchable, whereas intangible assets like like stocks, bonds, pensions and royalties hold value despite their inability to be physically handled.
By identifying the nature and worth of your assets, you'll have an accurate assessment of your financial standing and net worth. This understanding is the foundation from which you can confidently negotiate and navigate your divorce, making certain that your interests are represented fairly.
Right about now you might be wondering:
"Now that I know why I should list my assets and their value, and how to identify why kind of assets I have, what should I do next?"
Yet again, I've got you covered!
Here are 7 actions you can take to help protect your assets during divorce:
1. Catalogue Your Assets 7 Ways To Protect Your Assets During Divorce
One of the first things you should do is to make a list of your assets. This includes things like bank accounts, investments, retirement accounts, physical items, and any properties you own. Knowing what you have and how much it's worth can help you negotiate a fair settlement and ensure that you're not being shortchanged.
You might be thinking, "I don't have time to take on that kind of project right now!". I've got you. Check out the List Your Assets worksheet I created. It prompts you on what you should include in your list and simplifies the process by providing you with two versions of the program (PDF and spreadsheet) so you have a few ways to log your assets: 7
Ways To Protect Your Assets During Divorce
Print out and fill-in the PDF by hand. Keep your list and the essential documents you'll need moving forward in a folder or binder so you can easily access and share them.
Use a PDF reader like Books and Good Notes to fill in the worksheet on your phone, tablet or computer. Save the file so you can easily share it via email or using a cloud based account.
Use the Excel & Numbers compatible spreadsheet option. Save the file on your computer, phone or tablet (or on a cloud based account) so you can easily share it with a divorce attorney, mediator, or financial advisor moving forward.
Sharing your asset log with your divorce attorney or mediator, or using it for your local courthouse filing, will be a snap!
2. Get Organized 7 Ways To Protect Your Assets During Divorce
When protecting your assets during divorce, one of the best investments you can make is to get organized. You'll want to collect any and all paperwork and/or statements associated with your assets. If you have valuable tangible assets make sure to get them professionally appraised.
Keep everything in one place so you have it easily accessible when you're consulting with divorce attorneys or mediators. It's all the administrative stuff that's needed for your divorce professional to start the process. So not only does getting organized now put you in the best position moving forward, it also saves you money because you won't get countless emails and phone calls (all of which you'll be charged for!) requesting all of this information.
I know, you're busy enough as it is. I've got you covered again! Check out the What To Gather worksheet. It walks through what to get your hands on, what to do if you don't have access to information, and how to store your information so it's easy to share with your divorce attorney or mediator.
3. Open Your Own Accounts
If you have joint accounts with your spouse, it's a good idea to open your own accounts as soon as possible. This includes bank accounts, credit cards, and any other financial accounts. Make sure you have your own credit card and start building credit in your own name. This will help protect your finances and give you more control over your money.
4. Don't Let Emotions Cloud Your Judgment
Divorce can be an emotional roller coaster, but it's important not to let your emotions cloud your judgment. Avoid making impulsive decisions or taking actions out of anger or frustration. Think carefully before you make any financial decisions, and make sure they're in your best interests.
5. Talk To A Divorce Financial Advisor
A financial advisor can help you navigate the complexities of divorce and protect your assets. They can help you understand your financial situation and develop a plan for the future. A financial advisor can also provide guidance on things like retirement planning, budgeting, and investing.
Financial planner Josephti Cruz of The Wealth Garden recommends meeting with an advisor as soon as you've got all of your financial information in hand and start meeting with divorce attorneys or mediators. That way you'll be able to take your future into account as you negotiate the terms of your divorce.
PRO TIP: Many banks, credit unions and other financial institutions offer free financial advisor services!
6. Don't Forget About Taxes
Divorce can have significant tax implications, so it's important to keep taxes in mind when you're negotiating a settlement. For example, if you're going to be paying or receiving alimony, you'll need to factor in the tax consequences of that income. It's a good idea to discuss your projected support payments with a tax professional who can help you navigate these complexities and ensure that you're not caught off guard by unexpected tax bills.
7. Get a Copy of Your Credit Report
Your credit score is a valuable asset, and it's important to protect it during the divorce process. Get a copy of your credit report to check for any errors or fraudulent accounts. If you have joint accounts, such as a mortgage or car loan, make sure they are paid on time and in full to avoid damaging your credit score.