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How to Protect your Money During Divorce

Do you have any reason to suspect that you will likely be going though a divorce soon? Are you currently going through one? If YES, then you ought to start thinking ahead. This article will give you pointers on how to protect your money during a divorce. 

When people sign the ‘happily ever after’ dotted line, nobody ever expects the marriage to have knotty issues let alone have any reason to resort to divorce anytime in the future. But life does happen, and reality does set it; and for some people it happens even faster.

In fact, divorce is so prevalent that nearly 50% of couples who marry in the United States end up in divorce at some point.

Some relationships can get so sour that some partners go out of their ways to hurt their partners in any way possible, and their first target is usually the money.

Money is a very important factor in a divorce. This is because the divorce law stipulates that everything a couple owns must be shared in equal parts in the event of a legal divorce. For partners that have a lot at stake, this could be an unpleasant development as they can end up losing everything if care is not taken.

During a divorce, home, cars, jewelry, businesses, investments, debts, and child visitation rights would be split between the couple, so it makes economic sense for you to take steps to protect your money. In fact, people have been known to have lost businesses in a divorce while many other have been rendered homeless.

Life would continue after a divorce and you need to secure your finances so you can move on and continue your life, this is especially important where there are kids to look out for. Protecting yourself from financial harm and having ready access to the financial resources you may need during your divorce is important.

A couple of people are very necessary if you want to protect your assets if you are going through a divorce, especially a bitter one. The first person is a divorce attorney because dissolving a marriage is a complex legal process, which requires help from a competent attorney. This person should be an expert in family law. Keep in mind that each state has its own set of rules and procedures when it comes to divorce. Choosing the wrong attorney can have far-reaching and long term negative implications on your finances. So, you should by all means choose a good attorney that would have your best interests at heart.

The next person you have to look out for is a divorce financial analyst. A Certified Divorce Financial Analyst (CDFA) is a financial planner with expertise in the intricacies of divorce. A CDFA will help you understand your financial picture, determine which assets to split, analyze settlement proposals, explain often-ignored tax implications, and help you position yourself for long-term financial success after your divorce. A CDFA serves as your personal business advisor during a divorce. This person is very necessary as he or she would help you save as much as you can from the rubbles of divorce.

The third person is a therapist. While a therapist may not necessarily help you save money or assets, he or she would help you move as smoothly and as emotionally balanced as possible through the divorce process. A good therapist can work through any difficult emotional issues you are coping with. He or she will allow you to focus on the legal and financial decisions with a rational mind. Remember that if you’re better equipped emotionally, you’re better able to help your children through this transition. Given the inherent emotional challenges of ending a relationship, you should have a therapist on your team.

That said, here are ways you can try on your own to keep your money safe if you are going through a divorce or if you are anticipating a divorce in your problematic marriage.

How to Protect your Money During A Divorce

  1. Get a separate bank account

This may sound simple enough, but it is one of the first steps you need to take whenever you start anticipating a divorce. If you and your spouse operated a joint account, you might want to get a separate bank account, credit cards, and even points or loyalty rewards cards in your own name. Once you separate and file for divorce you’ll need cash to cover attorney fees, court fees and, if necessary, a new place to live. A good rule of thumb is to not file for divorce until you have enough money for legal fees and living expenses to last at least 3 months, so as not to be left stranded.

When getting a separate account, you need to inform your spouse when you do so, so as not to arouse suspicions of hiding money. Another option would be to have your spouse sign off of your existing accounts so they remain in your name after the divorce.

  1. Keep precious items safe

For people in abusive relationships, this can come about as a good idea. It is a fact that some spouses tend to break things when angry, and if they know a break up is in the offing, they tend to go all excessive. You can steal away these valuables in order to keep them safe, but not to hide them. You have to know that hiding items during a divorce is illegal and can lead to problems of its own. What you want to do is protect valuable assets but not hide the fact that they are in your possession. When you file a list of marital property with the court, make sure you list any valuables you’ve removed from the home. Do not sell any valuables if you need cash. If you do so, you will have to pay the monies back during divorce settlement negotiations.

  1. Close all joint holdings

You need remove yourself from any joint account if you must save some money during a divorce. If you must pay off a remaining balance on credit cards before the accounts can be closed, do so. Try making a list of every joint account, whether it’s a formal joint bank account, or just a shared PIN or password for other accounts. Where appropriate, change your PINs and passwords, and make sure any formally joined accounts are separated or closed.

If you can’t, talk to your credit card company about freezing the accounts to future spending while you work to pay off the current balance. This will help to protect you from being liable for any more of your ex-spouse’s spending. Also, open a credit card under your name only and work on building your own credit. This can be particularly important if you’ve never had your own credit card before and you want to do things like apply for an apartment or buy your own car.

4. Stay clear of debt

You need to save a lot of money if you are planning to go through a divorce. You need to avoid running up charges on your credit card. Once you’ve gotten your name removed from a credit card, you are advised to cut it up to avoid repeat usage. Keep a wise head and save for the future so you don’t begin your new single life without of control credit card debt.

5. Get a copy of your credit report and that of your partner

You need to have all the knowledge you can when going through a divorce. You should not only know what your credit report looks like, you should also know that of your partner. As you close joint accounts and make other changes to your finances, it is possible that you’ll notice a drop in your credit score. You should be on the lookout for large plummets in your score that could indicate an issue, such as a mistake made by a creditor or even debt being racked up under an existing account without your knowledge. This is something that unfortunately happens, even in “amicable” divorces, so it may be worth enrolling in a credit monitoring program or at least using a free credit score reporting service to keep an eye on your score in the months and years following your divorce. If there are issues with the credit reports, you can go to work cleaning yours up if you have copies of both credit reports.

6. Hire a tax professional and financial planner

Let’s face the facts, you cannot do this on your own. While it’s one thing to create your own budget and try to figure out how much money you’ll need to live on as a newly single person, it’s another to have an accurate picture of what your financial future holds. For most people, it makes sense to work with a financial planner who can give you that picture. The same is true with taxes; a tax professional can tell you how much a proposed settlement will be worth after taxes – and how you can deduct alimony payments or take advantage of childcare tax credits to save money in the future.

7. Demand health benefits if you must

Health insurance can get very expensive, very quickly. If your spouse carried you on his or her insurance during your marriage, ask if you can still stay on the plan for the time being. You may have to pay for it on your own, but that would still be worth it. Sometimes, ex-spouses can stay on a plan for up to 3 years. The catch is that you have to apply within 60 days of your divorce to get these benefits.

8. Hold on to pension and retirement accounts

Another thing one can take advantage of to save money during a divorce is pension and retirement accounts. Retirement accounts like 401Ks or pension plans are also divided during a divorce. In fact, many couples will find that much of their net worth is stored in these accounts and plans. However, they don’t always have to be divided in half. A Qualified Domestic Relations Order (QDRO) is used by courts to designate how retirement assets will be split. QDROs and dividing retirement accounts can be complicated, but they can be substantial when it comes to protecting your financial standing into the future. Talk to your divorce attorney early on about your retirement accounts and how to obtain a QDRO.

9. Get a job

Sometimes, a spouse can get to receive spousal maintenance from a partner after a divorce. This can be a certain amount and it can run for a certain period of time as decided by the judge. You are seriously advised not to count on permanent spousal maintenance as part of your future budgeting. In fact, you may not want to count on it at all because, in many cases alimony won’t be enough to support your current standard of living.

Judges usually expect people who can work and earn a living to do exactly that. That means your spousal maintenance isn’t likely to last as long as you want it to – and the judge might award you less than you want, too. So you need to be proactive…get a job.

10. Keep note of whatever money you had before the marriage

The best way to get around money issues in marriage is to sign a prenuptial agreement, but in the event such wasn’t done, you have to keep track of you brought into the marriage or what you received during the marriage that’s yours only. That can include inheritances, property you owned, and personal savings you had before you married. If your money financed a family business or your ex-spouse’s education, you should let your lawyer know about that and other assets you contributed while you were married so he or she can help you divide it accurately.

11. Start saving

When facing an imminent divorce, you need to start saving money aggressively. If your spouse blindsided you with news of the divorce, he or she has probably already stashed away enough cash to last a while. You haven’t had the same luxury, but it’s not too late. You can try as much as possible to set aside 10 percent of what you bring in as emergency savings. Make sure the funds you are bringing into the family are enough to cover bills that you’re still responsible for paying so as not to complicate issues further.

12. Try as much as possible to negotiate

Litigation costs money, and the more it is prolonged, the more you have to spend. So fighting endlessly with your spouse would be to your detriment, and, it leads to a more time-consuming divorce. The more you fight, the angrier you’ll both become – and nobody is going to budge. All of this costs money – and in the vast majority of cases, its money you don’t have to spend. You both should try and be mature about it and try and resolve your issues amicably through negotiation. This would help you save loads of money and a lot of emotional stress.

13. Don’t hide assets

Hiding assets during a divorce can to backfire on you tremendously. Getting caught concealing assets can leave you with monetary fines, loss of credibility with the court, and other penalties you won’t want to pay. Whatever advantage you feel you may gain by hiding assets or gaming the system is not greater than the losses you would incur if any of your non-disclosures are found out. Protect yourself by obeying the letter of the law. Being honest about your assets from the start will actually help you protect your money in your divorce.

14. Change beneficiaries

It’s common for spouses to name each other as beneficiaries on insurance policies, trusts, wills, etc during their marriage. But this needs to change if you envisage a divorce. Get the beneficiaries changed on your accounts so that you can protect your money from going somewhere that you don’t want in the future. Take care of this sooner than later so that you don’t find yourself forgetting to do so down the road. People usually forget, that is why we are making this an issue.

15. Know the value of your assets

When it comes to the value of your home, vehicles, art, and other assets, don’t just guess what the totals are, be very sure. Getting properties and other valuable assets appraised will help you to know how much money truly exists between yourself and your ex-spouse. If you can, appraise these items before you start the divorce process to help move things along somewhat. It would also help you know when your spouse is trying to cheat you out of some money.

16. Get to know your state’s laws on divorce

One thing that can influence the outcome of a divorce is the laws existent in a state. Get to know as much as you can about the divorce laws in the state that you live or where your case will be handled. These laws could directly impact the ways in which you can defend your money in your divorce. For instance, California is a state with community property laws, which means it’s possible for you to lose half of anything that you own jointly when you get a divorce.

In this state, any marital assets and debts that were accumulated by either spouse throughout the marriage will be split 50/50. It’s important for you to take that into account when you file for divorce, as you could be stuck with less than what you contributed if your spouse earns a much lower income. You can decide to file your divorce in a more favourable state if you feel that you have a lot at stake.

17. Consult with an experienced divorce attorney

Even if you anticipate your divorce to be relatively amicable and peaceful, it’s always good to have an experienced divorce lawyer on your side to keep things on track. A family law attorney can offer you legal guidance. A divorce lawyer will understand the common types of financial mistakes people make when going through a divorce and will be able to steer you away from them. Furthermore, in the event that a financial dispute does arise, your lawyer will be able to represent you and protect your rights. Other professionals, such as a Certified Financial Professional (CFP) or a Certified Divorce Financial Analyst (CDFA) can offer advice that is specific to safeguarding your money throughout the divorce process. Yes, it may seem that hiring these people would cost you a bundle, but in reality, they are your best bet especially if you have a lot at stake in the marriage.

18. Reconsider Your Life Insurance

Just like your health insurance, you should consider keeping your life insurance. Despite the fact you’re separated, your former spouse still has a stake in your life and the lives of your loved ones. If you have children together, it’s likely they will be their caretakers should you die. It would be good if your life insurance can still benefit them in such situation. So you should consider leaving your life insurance intact.

19. Ensure Your Separation Agreement Covers All Debts and Responsibilities

Sometimes, you cannot avoid carrying some debts to the divorce court, and as divorce is about sharing assets, it is also about sharing debts. You have to make sure any agreement that you come to with your ex considers how your collective and individual debt will be divided. In some instances, you may want to assume more debt in exchange for retaining more assets, but you should consider all the implications before doing this.

20. Prepare For the Cost of Divorce

Of course not every divorce needs to be arduous and expensive, but the fact remains that divorce causes a major realignment of your financial situation because it does cost money whether contested or not. The cost of divorce can range from as little as $1,000 (for an uncontested divorce) to hundreds of thousands of dollars (if there is a lot of fighting). You need to know how you are going to pay for the many expenses associated with divorce before embarking on the process. Be sure you’ve saved sufficiently and can cover expenses such as legal fees, rent, and moving that you may need during and after divorce proceedings. Regardless of your situation, you have to know that you will not be able to get adequate divorce support (much less prepare for life afterwards) if you cannot pay for the appropriate experts.

Even after the divorce is finalized, you may find your financial situation a little rocky. Plan to weather the storm for the first two years following a divorce before a return to normal.

21. Know what is up for sharing and what is not

Not every financial asset is up for grabs in a divorce. Assets you owned prior to the marriage may not be negotiable for settlement. For instance, if you owned a family vacation property, or any family heirlooms such as jewelry, furniture, or even firearms or clothing, those items may not be included in a settlement except in the most extreme and unlikely situations. So make sure you indicate these if you have them to avoid mix-ups and avoidable losses.

22. Organize financial documents

Gathering essential financial information like tax returns, employment records, bank statements investment statements from your broker, and any other relevant financial statements that you may have at your disposal, will help you save money as you work with your legal and financial team. Your financial statements will come in really handy in court, so be sure to go into the fight armed with as much documentation as you possibly can regarding your finances. Too many times the necessary documents seem to disappear after a divorce starts, so to the highest degree possible, gather those documents before you even start the divorce.

23. Separate Your Mail

You are building your own financial life right now that is separate and apart from your current partner. That means that you will need to get your own mail and maintain your privacy. The best way to do that is to set up a PO Box and have your mail delivered there rather than to the house or apartment. Don’t wait until things get ugly and your spouse gets funny with your mail. Waiting may cost you more than you bargained for.

24. Discuss your financial needs with your lawyer

Divorce lawyers will typically consult with their clients to determine exactly how much money is needed to continue living a certain lifestyle. They’ll do their best to look out for their clients’ best interests and attempt to reach an agreement as easily and quickly as possible. In order to do that, you’ll need to determine exactly what you think you need to maintain your lifestyle or at the least, the amount of money needed just to pay your bills.

Without carefully examining your long-term needs, you could be signing off on a settlement that might not work for you. Ensure that you open up about facts on ground to your lawyer so he or she can help you.

25. Clearly Identify Your Assets

Before your ex has a chance to claim a stake in certain assets that are technically yours, make sure that you’ve taken the time to itemize these belongings and document them accordingly. Before you can truly fight for your things, you need to find out exactly how much money you actually have, whether in liquid form or in the form of assets.

Clarify the things that are in your name versus what belongs to your spouse, as well as things you may own together, such as property, mortgages, investments, bank accounts, and others. Along with such a list should be statements that outline the exact value of such assets and proof of ownership. A judge is going to want to see careful documentation of what belongs to who rather than trying to sift through a he-said-she-said type of scenario.

26. Pick your divorce lawyer wisely, as it can save you cash

This is where you need to do a lot of research because if you want the best out of a divorce, you have to get the best lawyer. But you have to know that the most expensive lawyer might not be the best. Just because an attorney has a high hourly rate doesn’t necessarily mean he or she will honor your wishes. For best results, look out for his or her previous success rates.

27. Know Your Biggest Asset and ask for it

According to experts, many people mistakenly believe that their house is their biggest asset when it is actually a retirement or pension account. Even if your retirement account is less than robust now, the court will likely consider its future value when dividing assets. What I’m trying to imply here is that you ought to know which asset in the family is of the most important to you so you can get your lawyer to fight for it. You should endavour not to let your emotions becloud your sense of judgment while doing this or you would end up regretting it.

28. Consider Mediating Your Divorce

It’s no secret that divorce can be expensive. One way to cut down on these expenses is to use a mediator. A mediator doesn’t work on behalf of any one party, he or she just facilitates agreements. If you want to keep your divorce details behind closed doors while cutting costs big time, a mediator might be the best bet for both you, your spouse and your bank account.

29. A Former Spouse Can Be a Great Tax Shield

People who pay alimony are rarely grateful for the opportunity. However, ex-spouses can actually help you during tax time. According to experts, people who pay alimony to their exes can write it off as a tax deduction. On the other hand, those who receive alimony must report it as taxable income. It is important to note though that alimony is different from child support, which is neither taxable nor deductible.

30. Protect Your Mutual Assets

If your spouse is angry about your divorce or wants to get revenge, he or she may try to use up your joint assets rather than allow you to get a portion of those assets in your divorce. If you are concerned that your spouse may attempt this, consult a family law attorney right away about what steps you can take to safeguard your joint assets. For example, the attorney will probably advise you to avoid maintaining large cash balances in your joint checking accounts or will file a temporary restraining order and request an emergency hearing regarding the property in question. This is done when you were not able to close your joint account prior the divorce.

31. Update your skills Before You File

If you have been a stay-at-home mom and have no marketable skills, go back to school before jumping into a divorce. You can protect your future by making sure you have future earning potential. Don’t make the mistake that you will be able to live off child support and alimony while you go back to school. Alimony laws are changing drastically. Today, you will receive very little for a very short period of time.

32. Contact your mortgage provider

Depending on whose name is on the mortgage, you might need to speak to your mortgage lender to explain what has happened and discuss how you’ll manage the mortgage repayments. If you have a joint mortgage, you’re both equally liable for the whole loan (and not half each). If you don’t keep up your mortgage payments it could damage your credit rating, which could make it harder to borrow in the future. So ensure this part is properly settled.


Protecting your money during a divorce can help you set yourself up for a successful future. The most important part is to figure out how you can lower divorce costs overall. Litigation can be an expensive and lengthy process, so if you can, consider other options for handling your case. Working with a mediator or collaborative practice to reach agreements can help you protect your money by lowering the overall cost of your divorce. Moreover, you could find yourself paying divorce-related fees if you continue to experience conflict over matters like child custody which lead you back to your lawyer’s office or into the courtroom.

Protecting your money in divorce can be made much easier by having the right information and strategies in place. Consider the items in this checklist to help you protect your money while going through a divorce.