When you or your spouse begins divorce proceedings, you both will likely have financial concerns. There are common mistakes divorcing couples make that you should avoid. If you can avoid them, your divorce will go smoother, and it will make it easier for the two of you to make the necessary compromises as you settle your divorce and divide your assets.
Financial Don’ts in a Divorce
Some things you absolutely should not do during your divorce are:
- Do not close any bank account. You and your spouse both need to maintain access to the funds the same as before filing for divorce. Closing a bank account will come back to haunt you in court and will create animosity with your spouse to a degree that it will make it difficult for you to work together to settle your other divorce issues.
- Do not change any beneficiary on any insurance policy or bank account. Wait until the divorce is final and all the issues have been resolved.
- Do not change any trust or estate documents.
- Do not run up any credit cards. It is possible that debt incurred on a credit card after the divorce is filed will be deemed as the separate property of the person who made the charges. At a minimum, the charges will become part of the community debt, and you will still have to pay half of it.
In California and other states, when one spouse files for a divorce, there are automatic restraining orders that go into place that prevent any of the above actions. They are designed to protect each spouse so they both maintain their car insurance, health insurance, and access to bank accounts.
What you need to do financially is pretty simple: maintain the status quo as much as possible. Make responsible decisions and do not waste community assets.
Work with your spouse to come up with a financial plan that will help you both survive on the same income you were using for one household now that you have two. This will work until you can meet with your attorneys and financial advisors to come up with a permanent post-divorce workable financial plan.
For assistance in learning more about financial dos and don’ts during your divorce, contact us at Heberger & Company, An Accountancy Corporation.