Accounting For A Divorce: Tips To Protect Your Assets During A Divorce

August 20th, 2013 by

A divorce is a big life change for your family and your way of life. But a divorce can also mean drastic changes to your accounting practices as well. Between splitting up your possessions and assets with your former spouse and the potential for alimony and child support payments, your finances will need some major readjusting. There are a few simple steps you can speak to your  accountant about protecting your assets during a divorce.

 

Joint Accounts

If you and your spouse have a joint account, it may be in your best interest to open your own separate account. When making the split, withdraw only some of the money and deposit it in an account at a separate bank under your own name. It is important to keep in mind that you will still need the money in your joint account to be sufficient to cover expenses that you and your spouse have currently. The same rule rings true if you and your spouse share any lines of credit through a bank or credit card center. Having individual credit is essential to starting life on your own and the earlier you have this established, the better. It can take time to build your own credit and depending on the status of the accounts when you closed them, it could be several years until you build superior credit again. By being proactive you can save yourself some of the hassle involved in starting your financial credentials over.

 

Avoid The Battle

Divorces are not happy occasions and sometimes trying to split up the personal belongings can get heated. In order to save yourself and your spouse money in the divorce proceedings, it is essential that you skip as much of the litigation as possible. Just remember that the longer you and your wife spend sitting with lawyers arguing, the more money you both are losing to lawyer’s fees. If it is at all possible to split up the mutual assets amicably, this may be the best road to take.

 

Get Financial Planning Advice In The Beginning

Once you’ve decided to make the split from your spouse, it is important to get an idea of how your finances will be affected as soon as possible. Talking to a CPA can help you determine how much money you will need to support yourself or if you can afford the payments on your house after the divorce is finalized. Knowing these essential pieces of information early on in the divorce can help you decide if it is more prudent to fight for your house or to sell it and split the money with your spouse. A good financial planner can also help you to determine which investments are worth fighting for and which are too risky to be worth the effort. Consider speaking with a CPA before you begin your divorce proceedings to come up with a financial plan that will work for your future.

Beginning your finances again can be a struggle. It is difficult to make sure that you are getting everything that you deserve out of your divorce, and it is even harder to imagine what your financial future will be like. Hire a CPA to help you understand your options and what you can do to start over.