After a couple in Massachusetts has spent decades of saving and investing together, the stakes and potential financial fallout can be higher in "gray" divorces.
Here are six things you can do to prepare:
1. Hire an experienced divorce attorney. Ideally, this person will emphasize mediation over litigation. Both spouses tend to fare better in structured processes where they negotiate solutions to their disputes, financial and otherwise, rather than letting a court decide.
2. Open accounts in your name only. If you're a nonworking spouse (say, a longtime stay-at-home mom), it's important for you to start right away to establish your own credit history in case you later need a car loan or mortgage. Even if you already have a history on file, many lawyers advise freezing or closing joint bank and credit card accounts to prevent you from being responsible for buying sprees by your soon-to-be former spouse. Car insurance policies and the like should also be changed to reflect your new solo status.
3. Take inventory of assets and debts. With your attorney's help, ask for a full disclosure of all joint and individually owned financial assets so you can know where your money is and where it goes. Make copies for safekeeping of loans and credit card accounts, as well as home equity lines, past tax returns and business debts. You'll also want to get a handle on "nonmarital assets," things considered to belong to only one spouse, such as property brought to the marriage, inheritances and gifts given specifically to one person.
4. Sort out mortgage and rent payments. Mortgage companies and landlords expect payments to be made regardless of your personal situation. You may want to move out to your own place as soon as possible, even before a divorce, but that might hurt your claim to the home and you may still be responsible for a portion of the mortgage payment.
5. Be prepared to share retirement accounts. Just because your name is on a 401(k) or IRA doesn't mean it's not up for grabs. These funds may be considered "marital property" and subject to negotiation. Eventual division of 401(k)s, 403(b)s and pensions will be governed by a legal document called a QDRO; the carving up of IRAs is addressed in the divorce decree.
6. Change your will. As you prepare for a divorce, or immediately upon its settlement, adjust your will accordingly.
Should you be in the midst of a divorce or contemplating divorce, contact the Law Offices of Renee Lazar either through email or telephone 978-844-4095 to schedule a FREE one hour no obligation consultation.