Divorce is scary for everyone, whether you are the one filing for divorce or the one being told you are getting divorced. After you get over the initial impact of the decision or news you need to start taking action, which is a separate blog you should review (https://www.jcastlelaw.com/blog/archives/10- 2020).
Here are seven things you need to do immediately before filing for divorce to help protect yourself going forward:
1. Joint and Separate Bank Accounts: First, you should verify the funds in your joint and separate account(s). Not everyone will have a separate account; but, if you do, make sure you know what you have in the account. It is also important for you to know that even with it being a separate account, it is most likely still community funds in the account. If you do not have a separate account, I would open a new account and take one-half of the funds in the joint account to ensure you have some money available to you going forward.
Two notes to consider:
(1) Taking the funds will cause some drama and distrust, but it’s preferrable to have some distrust and be able to pay expenses than to be broke and unable to provide for yourself, or you and the children, while maintaining trust;
(2) These funds should be spent first to pay your expenses.
2. New Bank Account: You need to have a new, separate bank account opened. In Arizona, the ‘community’ terminates upon service of the Petition for Dissolution of Marriage. Therefore, you should wait until the date of service to put any money in the account. This is not the same account in the previous point, as those funds are community property, and your spouse is entitled to half the funds. This account will be for any money you earn after the date of service, as those funds are your separate funds, meaning your spouse is not entitled to these funds.
3. Direct Deposit: If you are employed, you need to contact your HR Department and have your direct deposit rerouted to the new, separate bank account you just created. Again, after service, your earnings are now separate property, and you need to keep these funds separate from any community funds to avoid comingling.
4. Credit Cards: If you do not have any credit cards, you need to apply and get a new credit card that only you can use. The divorce process is long, and you will want to have emergency access to money, as there are numerous expenses, like legal fees, that you likely have not anticipated. Hopefully you will never need to use the credit card, but it is far easier to get approved for a credit card before the divorce than it will be six months down the road, when you have only your income to qualify.
5. Retirement and Benefits: Prior to the divorce being filed, you can make changes to your beneficiaries. You should contact your HR Department and financial institution to change the beneficiary on your retirement accounts and any life insurance policy. Once the divorce is filed, the preliminary injunctions apply, which prevent you from making any changes until the divorce is finalized. In the unlikely event that you were to pass prior to the divorce (or after the divorce, but before you can make the changes), it is unlikely you want your retirement benefits or life insurance proceeds to be distributed to your ex-spouse.
6. Credit Report: I highly encourage my clients to run their credit report and verify any-and-all open accounts. If you have an account that is open, but not used, close the account immediately. If you have accounts that you were not aware of, investigate them, as it may be important to share them with your attorney. Finally, this information will also give you some insight into future decisions you will need to make, like refinancing a home, buying a home, or even applying for a rental.
7. Budget: Create a new budget based solely on your income and the expenses that you will have going forward. Knowing your budget will help you and your attorney plan for the early stages of the dissolution process. For example, you may not have the funds to move out of the marital residence, or you may be unable to qualify for a lease on a new apartment. Similarly, you may have to make alternative decisions regarding childcare or school tuition. Having a budget allows you to make informed decisions that you can actually fulfill, rather than putting yourself in a worse financial position.
Divorce is like a bomb exploding right in the middle of your life - it has rippling effects that will impact almost every area of your life. These 7 money suggestions will help you start to gain control and rebuild your life. There are many other decisions that you will need to make during the divorce process, and having an experienced attorney to advise you can be invaluable and can have long term, positive impact on the opportunities you will have once the divorce is over and you have started your new life.
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**Blog Posts Written by Castle Law Attorneys: Jason Castle, Kelly Kehm
Jason Castle is a family lawyer who specializes in high-conflict cases. He's also a former prosecutor & social worker. Hear his latest divorce thoughts!