Five Best Financial Tips for Women Divorcing in 2013
We’re all in hustle-and-bustle mode these days. Everyone has a list that needs attention right away, whether it’s shopping, end-of-semester activities, end-of-year deadlines, holiday preparations, celebrations with family, friends and colleagues . . . or all of the above. With so much to wrap up (literally and otherwise!), it’s understandable that larger concerns tend to get put on hold till after the New Year.
Of course, ending a marriage is one of the largest concerns a person can have at any time of year. Maybe you resolved last December to try and make things work in 2012, but it’s clear now that the marriage is over. Maybe you wanted to spare the family upheaval during the holidays. Practically speaking, maybe you’ve been waiting to file your 2012 tax returns, or for your husband’s end-of-year bonuses so that can be counted as marital property when it comes time to work out a settlement.
In any case, as the turn of the calendar gives momentum toward a new beginning, it’s no surprise that January sees more divorce filings than any other month. If you are planning to divorce in 2013, here are the five best things you can do now that will make the process go more smoothly once it formally begins:
1. Gather financial documents. Along with holiday greetings, this month’s mail brings year-end statements from banks, brokerages, credit card companies and the like. Make copies of these. Go through our Financial Information Checklist to see what other financial and legal documents you should gather and copy as well. Secure the copies with a trusted friend or family member, or use a safe deposit box that your husband can’t access. Having important documents on hand early in the divorce process means you avoid any possible unpleasantness (not to mention time and expense) trying to get copies of them later.
2. Assess your credit. Request a copy of your credit report, and correct any misinformation it contains. Good credit is the foundation of your financial future, so watch it carefully! Without credit it can be near impossible to obtain loans for any purpose, or even to manage the expenses of running your household. Keep an especially close eye on credit card statements. If your husband is using your joint credit cards to buy his girlfriend gifts this holiday season, you’ll want to be able to document that.
3. Open accounts in your own name. As a single woman, you will need your own bank accounts and credit cards. It is not too soon to set these up. Use a different bank than where you currently have joint accounts, and open both savings and checking accounts in your name alone. Credit cards are especially important, and may be somewhat difficult to obtain. The Credit Card Accountability, Responsibility and Disclosure (CARD) Act was passed in 2009 to protect consumers, especially college students, from getting into serious financial trouble by accumulating credit card debt they could not afford to pay. A provision of the law prevents people from getting credit cards on the basis of family income, when that income is not individually theirs. Unfortunately, though, that provision can also make it difficult, if not impossible, for “at-home” spouses without paid work to obtain credit on their own. Women who put their careers on hold to care for children and family, and then find themselves divorcing, are very vulnerable to the serious problems this can cause. The good news is that in October 2012, the Consumer Financial Protection Bureau proposed changes to the CARD Act to rectify this unintended consequence of the law. The changes will allow non-working spouses to apply for credit in their own name based upon shared household income.
4. Begin to assemble a professional divorce team. Gone are the days when, if you or your husband wanted a divorce, the only thing to do was for each of you to retain lawyers who would then work through all the legal matters. Today, financial portfolios –and the regulations that govern them –are much more complex, and many women find they need multiple layers of professional help to navigate all the legal and financial details. If you’ll be divorcing in 2013, it’s a good idea to begin researching divorce professionals who can steer the process. I recommend you start with a matrimonial/family law attorney, a divorce financial planner and a therapist/counselor. Gather and compare information and schedule interviews with the best candidates for January. Then, you can relax a bit, knowing that, as the New Year unfolds, your divorce will be in expert hands.
5. Be watchful. As your focus turns from being married in 2012 to getting divorced in 2013, there are some important things to watch out for. It is still very common for husbands to hide assets and/or income during divorce –even though that’s underhanded, unethical and illegal. The tactics run the gamut from stashing cash in safety deposit boxes, to underreporting income and over reporting expenses, to unloading property to family and friends with the understanding he’ll get it back after the divorce settlement is final. I’ve written before about specific signs that your husband might be hiding assets. Be vigilant.
Moreover, if you have any reason to suspect there is something amiss financially, you may want to seriously rethink filing a joint tax return for 2012. In most cases, the IRS is likely to find you are equally liable for any misdeeds, no matter how innocent or ignorant of them you are. (There is a very limited and hard-to-get I.R.S. and state exception called “Innocent Spouse Relief,” but it is rarely accepted. Find more details in this article.)
In closing, let me also remind you to use this time of year to take full advantage of the mental and emotional clean slate a New Year brings. Begin to Think Financially, Not Emotionally®, and set your sights on your future as an independent single woman. If you are considering divorce in 2013, you are far from alone, and there are more resources and professional help than ever to guide you through the process. Resolve to get the help you need to start down the path toward your secure financial future, and you’ll be able to ring in the New Year with confidence.