Divorce Finance

Denise Trowbridge

The numbers don't lie: Half of all marriages end in divorce. Just ask the U.S. Census Bureau. Divorce happens. Here are a few tips for handling it.

Secure something for yourself - especially if you're a non-working, stay-at-home parent. Stay-at-home parents are particularly vulnerable during a divorce. "If your spouse is providing the means by which bills get paid, you need to get access to the accounts and get yourself resources, or you'll be begging and borrowing from family and friends," said Susan Moussi, a certified divorce financial planner at SMD Tax and Divorce Financial Planning Consultants in Columbus. "That could mean opening your own bank account and transferring half the assets from the joint account into it."

You'll also need a credit card in your own name, "not to run up debt, but to develop your own credit and have a resource if the cash isn't available immediately," she said.

Get organized, and get copies. You'll need copies of the last three to five years of tax returns, recent statements for bank, investment and retirement accounts, as well as pay stubs. "If the spouse takes everything, you will be relying on them to provide copies during the entire divorce process," Moussi said. Lawyers and others need copies of those documents "to help clients make financial decisions and before some final agreement can be reached."

Work out how the bills will get paid now. It can take months to finalize a divorce and the financial agreements that go with it. In the meantime, "in the calmest way you can, try to work out with your spouse a temporary solution to (pay) bills," Moussi said. Both spouses likely want to preserve their credit scores and "don't want the kids to go without a roof over their heads."

Beware overspending. Though it's tempting to spend as you did while married, the reality is you have fewer resources on your own. "Your attorney might tell you not to make any changes to your lifestyle because it might determine the settlement outcome," Moussi said, but that doesn't reflect financial reality.

One spouse may move into an apartment, which means less cash for the family. Also beware spending to maintain the status quo. "We fear change and want to maintain our lives because we've lost our marriage," Moussi said. "But it can get you into trouble."

Often, for the sake of continuity in the children's lives, one parent will keep the family home - despite not having the resources to pay the mortgage alone. "(That) can leave them with little to do anything else. Sometimes downsizing is financially the better option," Moussi said.

Make thoughtful decisions. It's tempting to rush through a divorce to get it over with, but it pays to think through every decision carefully because a divorce decree can have long-term financial impacts: Spousal support can lead to unexpected income-tax bills, and government child-support guidelines haven't been updated since 2001. "You need to know what (post-divorce) life will look like and if you will be in the red with the settlement," Moussi said. "It's easier to do it on paper before agreeing to something, than to live with it after it's permanent."