Hey Mama Bears! Going through a divorce or separation can feel like a super bad storm. Everything feels shaky, and you just want to keep your kids safe. But even with rough waves, we gotta know how to protect your family’s finances during a divorce or separation – it’s your family’s money!
We all know moms don’t just think about ourselves, right? We worry about our kiddos’ future and keeping our family together. This isn’t just about grown-up stuff; it’s about making sure our cubs are okay, no matter what the weather’s like.
So, snuggle up with a warm drink, and let’s figure this out together. We’ll chat about ways to keep our finances steady, even when things feel rocky. Because guess what? We’re not just moms, we’re captains of our own ships, steering our families through anything! Now, let’s set sail!
Create a Financial Plan for Your Divorce
Okay Mamas, before we set sail on this new adventure, we gotta map out our course! This means taking inventory of everything on our ship – like making a treasure map of our family’s money.
First, let’s gather all our loot: list out our savings, investments, furniture, cars, basically everything valuable we own. Don’t forget to mark down any debts we owe, like credit cards or loans. This is like figuring out what’s soon to be in our treasure chests and what we still owe the store!
Next, we gotta make a budget. Budgeting might feel like cleaning up after a messy playdate, but it’s important! It helps us figure out how much money we need for the months ahead, like food, rent, and those unexpected surprises, like a trip to the doctor. Think of it as making sure we have enough supplies to keep our ship running smoothly.
Strategies for Safeguarding Assets and Ensuring Financial Stability
1. Open Your Own Bank Account & Freeze All Joint Bank Accounts
Moms, listen up! Time to become financially independent, like having our own pirate ship! Opening your own separate bank account is like claiming your own little island. It’s a safe space to manage your money without anyone else touching it.
Wendy Althen, the founder and owner of Althen Financial Solutions, LLC, says, “Money is one of the No. 1 reasons for divorce, and if it’s already a source of contention, that can lead to a partner emptying an account or using money as a bargaining chip.”
That’s why it’s important to take charge of your own account and freeze that joint account before problem ensues.
Here’s how to create your own financial island:
- Find the Perfect Bank: Look for a bank with features that work for you, like low fees or friendly tellers.
- Open Your Treasure Chest: You’ll just need some ID, proof of where you live, and sometimes a little starter treasure (a deposit).
- Secure the Gold: Make sure your income gets deposited directly into your new account. This is like grabbing your gold and keeping it safe!
Now, about that joint bank account or those shared bank accounts we have with our ex spouse (let’s not forget those joint credit cards too!)? Imagine them as leaky boats – we need to dock them and plug the holes! Freezing joint accounts stops any money from being taken out without both of us agreeing. It keeps everything safe until we figure out how to share it fairly.
Here’s how to dock those leaky boats:
- Talk to the Bank: Let them know we’re going through a divorce and want to freeze the accounts to stop any surprises.
- Get Expert Help: Freezing accounts can be tricky sometimes, so it’s good to talk to a lawyer first. They’ll make sure everything is done shipshape!
2. Monitor Your Credit Score
During this divorce, keeping a watchful eye on your credit score is like being a pirate captain with a spyglass, scanning the horizon for unexpected storms. We gotta make sure nothing messes it up and makes sailing the seas after divorce even harder.
Think of your credit score as the compass guiding your financial ship. A strong score can lead you to great deals on loans, easier approvals for renting a new place, and smoother financial sailing overall. But just like a sudden squall can throw off a compass, unexpected hits to your credit can steer you into rough waters.
Here’s how to keep your financial reputation shining as bright as a lighthouse:
- Regular Checkups: Make it a habit to review your credit report regularly. You can get a free report once a year from each of the three main credit bureaus through AnnualCreditReport.com. It’s like having a detailed treasure map of your financial journey.
- Spot and Report Treasure Trouble: If you see any mistakes or unfamiliar accounts, it’s like finding a hidden reef or a course off-track. Take action quickly and dispute any errors with the credit bureau. You deserve a clean and accurate map!
- Beware of Stowaways: Keep an eye out for any signs that your credit might be used without your permission. This could be accounts you don’t recognize or charges you didn’t make. During a divorce, financial boundaries can sometimes get blurry. If you see something suspicious, report it to your bank or credit card company right away.
- Lock Down Your Loot: Change passwords and security questions for your financial accounts. In our digital world, protecting your financial information online is as important as guarding your treasure chest. Make it tough for anyone to sneak in and take your gold!
- Steady the Course: While it might be tempting to open new credit cards or loans, especially if you’re starting fresh, be careful. Each application can lower your credit score a little bit. Unless you absolutely need to, try to keep things steady until the divorce is finalized and your finances settle down.
3. Create an Asset Protection Trust & Consider a Trust for Divorce Planning
Thinking about creating an asset protection trust? It’s like building a safe harbor for your treasures during a storm! This fancy legal tool can shield your valuable assets before and during the divorce. It helps you protect assets, make sure they’re managed how you want and keeps them separate from what gets divided in the divorce settlement.
4. Review Your Retirement Accounts
Knowing how retirement accounts are divided in a divorce is super important for protecting your retirement account and future financial security. These accounts often get split, but the rules can be all over the place. Knowing your rights and options helps ensure you set sail in the right direction for your retirement journey, even after the divorce.
How Assets Are Treated in Divorce & Community Property vs. Equitable Distribution
Understanding how assets are divided in a divorce depends on where you live. There are two main legal things to know: community property and equitable distribution. Community property means things acquired during marriage are split equally like a joint property. Equitable distribution means things are split fairly, not necessarily 50/50. Think of it like knowing the map of the land you’re exploring, so you end up in a fair spot.
How Is Debt Split in the Divorce Process?
Just like assets, debts get split too. How it works can vary, per family law, but generally, both parties are responsible for debts incurred during the marriage. It’s important to understand how to manage and divide these obligations so you don’t end up stuck with more than your fair share of the financial burden.
Can You Protect Your Savings? & Can You Transfer Money Before and During a Divorce?
Protecting your savings and understanding the legalities and tax implications of moving money around during a divorce is crucial. While securing your future is important, there are legal and ethical considerations to keep in mind to avoid getting into trouble. It’s about finding the balance between safeguarding your future and playing fair.
According to Laurie Itkin, a certified Divorce Financial Analyst, one of the most common mistakes women make when dividing assets during the divorce process is letting their anger cloud their reasoning:
“They [Women] want to punish their spouse and don’t view receiving 50 percent of the assets or limited duration spousal support as fair. Unfortunately, paying a lawyer to fight for something unreasonable will cost a lot of money and may not result in a more favorable financial outcome than could have been achieved through mediation.”
5. Legally Establish the Divorce & Make Sure the Paperwork Is Filled Out Correctly
Formalizing the divorce legally and making sure all the paperwork is filled out correctly is like officially setting sail on your new journey. It sets the course for everything that follows. Having everything documented properly keeps things smooth and ensures all agreements are legal and binding.
Consider Mediation Before Litigation
Mediation offers a calmer, often cheaper way to resolve issues during a divorce. Imagine navigating through peaceful waters instead of a raging storm! Mediation can lead to more amicable outcomes and keep the emotional well-being of everyone involved, especially the kids, a priority.
6. Hire Professionals to Help You & Get Professional Assistance With Safeguarding Your Family’s Money
Going through a divorce without a good crew can be dangerous. Hiring experienced attorneys (like a good divorce attorney or family law attorney), financial advisors, and other professionals is like having a seasoned crew by your side. They can provide the guidance and support you need to protect your interests and navigate the complex financial and legal waters of divorce.
Founder of UNtied, an organization for divorced and separated women, Elise Pettus shares this divorce advice:
“Do not put it off. Do it now. Knowing early on where you stand and what your options are will help you enormously. Connecting with a knowledgeable, experienced professional who has your back will also give you a sense of strength and readiness.”
Wrapping Up How To Protect Your Family’s Finances During a Divorce Or Separation
Alright Mamas, we’ve weathered some rough waves together, but remember, this storm won’t last forever. It’s a chance for a fresh start, a new adventure for you and your little crew! Here’s how to keep your ship sailing strong:
- Find Your First Mates: Gather your support team – lawyers, financial advisors, therapists – they’ll be your guiding lights on this journey.
- Map Your Course: Start with a clear financial plan. Figure out your treasure (money you own), your debts (money you owe), and the legal stuff (what you get to keep). Make smart choices that will keep your ship afloat for years to come.
- Guard Your Gold: Use fancy legal tools and smart planning to protect your future. Remember, this money is for you and your kiddos!
- Talk it Out, Don’t Shout it Out: If you can, try to work things out with your ex instead of going to court. It’s calmer waters for everyone, especially for the little ones.
- Keep Your Eyes Peeled: Watch your credit score, check your bank accounts often, and stay up-to-date on your rights throughout this whole thing.
Even though divorces can be tough, they can also make you stronger and braver. By taking charge of your finances, getting help from experts, and making smart decisions, you’re not just surviving the storm – you’re building a beautiful new ship for you and your kids to sail into calmer waters.
You’re the captain, Mama, and with a good plan, a great crew, and a never-give-up attitude, you can weather any storm. Now, set sail for a bright future filled with happiness and smooth sailing! Remember, you’ve got this!
As a Google Certified Project Manager and an expert in Google Analytics, I bring a wealth of knowledge in digital strategy and online visibility. My certifications from Digital Marketer in Email Marketing and Inbound Social Media Marketing further my ability to connect with families digitally, offering them valuable resources and insights to kickstart their journey towards financial independence.
Professionally, I lead as an SEO Project Leader at a leading boutique SEO agency in Boulder, Colorado. My expertise has not only propelled businesses to the forefront of their industries but has also been instrumental in crafting a strategic approach to my family’s financial growth. This unique blend of professional achievements and certifications equips me with the tools to guide other families towards achieving their financial goals with confidence.
Beyond my desk, I’m a CrossFit enthusiast, an avid hiker, and a lover of nature. These passions keep me grounded and remind me of the importance of a life well-lived—not just in financial terms, but in the wealth of experiences, happiness, and time spent with loved ones.
Through this blog, I aim to share my journey towards financial freedom, drawing on my professional expertise and personal experiences. My goal is to retire in the next 3-5 years, enjoying a life enriched with what truly matters—family, nature, and freedom. I invite you to join me and many other families on this journey, sharing insights, support, and practical advice to help each other achieve financial independence and live our dreams to the fullest.
Let’s empower each other to make informed financial decisions, leveraging our collective knowledge and experiences to build a community where financial freedom is accessible to all.
