You’re getting a divorce. Now what?

Going through a divorce is never easy. For many people, the proceedings are difficult emotionally and financially. It’s important, however, to ensure the choices you make leave you in the best possible position for long-term financial health as you move on with life. 

If a divorce is on your immediate horizon, it’s wise to check your emotions (as much as possible). Then consider taking the following six actions to avoid making financial mistakes as you prepare for what’s to come. These efforts enable you to prepare for upcoming negotiations by taking a long-term view. All of these items should be completed well before the divorce proceedings begin.

1. Take immediate steps to manage your debt

This is critical. Having sufficient cash when needed with good access to it, strong savings, controlling costs, and minimizing high-interest debt gives a family financial resiliency. It also enables all involved to absorb the emotional shock of a divorce without unnecessary fiscal stress.

2. Switch family plans to individual plans 

If you have joint credit cards, cell phone plans, or technology accounts, transition those to individual plans and be sure to follow through to make sure your requests are implemented. It’s not only better for your credit rating going forward, it makes the divorce proceedings less messy.

3. Know the status and value of inheritances 

In general, if you or your spouse inherited property it is not split up in the divorce, it goes to the spouse who inherited it. Future inheritances are also not typically divided up between spouses. However, the court may use future inheritances to shape decisions about what to do with current savings, cash flow and child support.

4. Have a plan for splitting up retirement accounts 

Your retirement accounts are obviously very important to your long-term financial health. It’s tempting to raid these assets (which can compromise your future financial health) to pay attorney fees and other costs associated with a divorce. Be mindful of when the retirement accounts were established and funded; contributions before marriage may stay with the individual.

5. Lean on trusted professionals

Assemble a team, including an experienced divorce attorney, an accountant and financial advisor. Lawyers can function as a referee in proceedings that can get adversarial and make the situation less difficult. A long-serving family accountant can provide an accurate agreed-upon, representation of the family’s financial standing. And financial consultants can help each spouse determine what they’ll need to maintain a given lifestyle, how much it will cost and the lump sum needed to make it a reality.

6. Keep an eye on your financial future

You won’t want to compromise the progress you have made in your retirement savings. It’s wise to speak with a planner now so you have a strategy in place going forward. During such an emotional time, it’s easy to neglect this step and fall behind on your retirement goals.

First Financial Bank's Yellow Cardinal Advisory Group can help with the process leading up to the divorce. We provide many valuable services you may need to tap, including online tracking tools that help you understand spending levels and monitor transactions. We can also serve as a neutral trustee. If a divorce is in your future – even if it’s many months away -- start preparing now. Leverage the six steps outlined above to get yourself and your finances ready for this major milestone.