People who are going through a divorce are often heavily focused on the property division process. They may not take the time to stop and think about other ways that this major life transition is going to affect them.
Divorce affects monthly income and household bills, but there’s also an increase in other expenses. Filing fees, moving expenses, new insurance policies, child-related costs and new housing expenses are some of the more visible ones. In some cases, taxes, retirement account division, appraisals and property refinancing are present.
Financial records can shape the process
Tax returns are often one of the more useful places to start. These returns show things like investment accounts, property-related expenses, income sources, business losses and tax deductions. Other documents to look at include retirement plan summaries, insurance policies and mortgage documents. You may also need bank, credit card and loan statements.
Building a new budget
When you’re going through a divorce, you need to revamp your finances, particularly if you were used to a dual-income home. One of the first things to do is to make a household budget. This gives you a chance to determine if your income can support your mortgage or rent, utilities, repairs, child care, school costs, vehicle payments, medical bills and other expenses. Be realistic about the budget because it’s usually best to overestimate expenses and underestimate income so you know you can handle what you have to pay.
Digging into complex finances
There are times when marital estates are complex. In those cases, a forensic accountant may be beneficial because they can help to trace assets, review business records and identify if assets are being moved or undervalued. All of this can be important to know as you’re working out the property division settlement.
It’s a good idea to financially prepare for the end of your marriage. This doesn’t mean that you’re assuming conflict will happen. Instead, it means that you’ll have the information you need to make the decisions that are in your best interests. It may be beneficial to work with someone familiar with these matters so they can assist throughout the process.
