How to Protect Your Finances During Divorce

Are you about to be a single mom because you are either considering or already going through a divorce with your spouse?

Divorce is a scary term and we have written this article to help women educate and protect themselves from the divorce process. Not only are you involving tense emotions, but you are also putting your personal finances at risk. The average couple does not have a prenuptial agreement, and many working women of today’s world are at risk when they find their marriage headed towards divorce. There are some wise ways you can protect your finances during divorce, so here we’ll lay out for you a step-by-step plan so that your money and assets can be protected.

Here is our detailed list of crucial steps to implement to protect your finances during divorce…

Open accounts exclusively in your name

This is a swift step in the right direction to ensure that your money stays your money. Money in joint accounts is fair game in the eyes of legal teams, but money that is yours and yours alone with your name attached to a federal bank is often untouchable. (If you’re a married millennial, then studies show that you’re much more likely to have separate accounts in the first place.)

The harsh reality lies in statistics—which we know hold the facts. According to the American Psychological Association, 40% to 50% of marriages end in divorce. You can be the most eternal optimist on the planet and could have thought that your marriage never would have ended, but if you find yourself headed down that road, you must get your personal finances in order—and fast. And registered bank accounts solely in your name is the perfect first step to do it.

Take action to dissolve joint accounts

By making the conscious effort with your spouse to dissolve joint bank accounts, this is a crucial first step towards ensuring your protecting your finances during a divorce. If your spouse is uncomfortable making this move, you’ll need to inform them that the two of you both need to stop using the account until the divorce is finalized.

It’s a scary thought, but there are many spiteful spouses who will quickly empty out joint bank accounts so that the other spouse is left high and dry. This is especially true in cases of infidelity, mistrust, and abuse. Money in joint accounts is no longer your money to use until the divorce is finalized and assets have been fairly divided. If your spouse withdrew large sums of money from joint bank accounts, then you’ll want to provide proper documentation of this to show to your lawyers so this can be factored into the divorce settlement.

Figure out exactly what you have

From liquid assets, real estate, cash, 401K, stocks, and more, if your marriage is headed towards divorce, you must carefully assess your finances in order to protect them. Because, how can you protect what you have if you don’t know exactly what it is that you’re protecting!?

TIP: The best way to do this is to develop a personal spreadsheet where you can make tabs for everything and clearly document all that you have. You can access free templates to calculate your net worth and account for your assets here

Once you’ve meticulously reviewed your sum of all finances, then you can properly decide on what is yours that you want to protect before getting the lawyers involved. The best defense is a good offense, so you’ll want to plan ahead and get your affairs in order. Strategy is key here to protect your finances during a divorce—especially a messy one. Not only is a spreadsheet a good idea, but make copies of financial statements so you can give this detailed information to the divorce attorney that you hire (more on that below).

Put your plan to create an emergency fund in action

You may have had a rainy day fund while you were happily married, but you’ll need to create an emergency fund ASAP when you know that a divorce is fast on the horizon. This is an alarmingly terrifying fact, but according to Business Insider, they recently revealed that January is reportedly the month with the highest divorce filing rate. It’s never a good idea to hide money from your partner because it can look suspicious in the eyes of legal professionals, but starting an emergency fund when you know divorce is inevitable can help you when you’re on a pinch and no longer have the financial support of your spouse to lean on.

Opening a savings account in your name is a great way to start an emergency fund for yourself while going through a divorce. Consider going with a bank that offers round up charges to trickle into your savings account. Chime is a great option for this and offers the best high yield savings for almost any savings account available today.

Have an honest conversation with your partner regarding assets

If you and your spouse own property together—as most married couples do—you’ll need to quickly decide whether you plan to sell or make the decision on which of you plans to vacate. Often the woman is the one to stay, but paying a mortgage on your own might not be a smart financial decision for you. Be real with yourself by asking yourself: is keeping the house really a win for me? Because if truthfully it’s not, then selling and splitting the profits of the sale is in everyone’s best interest. (Obviously lawyers will be involved for this process—don’t stress.)

This step in protecting your finances during divorce might prove difficult if the two of you are on bad terms. But if this is an amicable split and it’s coming with good intentions, try having a heart-to-heart conversation on this topic before getting your lawyers involved so that way you’ll have a better idea of what to expect in the end when the divorce is finalized.

Don’t be blindsided – be realistic

It doesn’t matter if your husband/wife was the most amazingly kind and thoughtful person you ever knew while the two of you were married. Chances are, when it comes to finances in your divorce, you might see a side of them you didn’t even know existed.

The smartest move you can make to protect your personal finances during a divorce is to allow logic and reason and not your feelings and heartache to make your decisions. Keep a level head, especially if there are children involved. You can remain fearlessly optimistic, but don’t get blindsided by not making a realistic game plan to protect your finances during your divorce. A good divorce attorney will be on your side to ensure you get what you deserve, so allow this impartial judge to help you make the best decision for your financial future as a divorcee.

Learn the laws in your state to better protect your finances during divorce

Each state is governed in a unique way, which means that you’ll need to do your homework so you know exactly what to expect when it comes to your divorce in the eyes of the law. Obviously there are states which have alimony and spousal support, and those which do not. A quick google search on “divorce laws” in the state in which you reside will help you to do your due diligence to start protecting your finances before divorce negotiations begin. By better understanding what to expect, this will help you to make smart decisions.

Be sure any agreements between the two of you are finalized in writing

This is modern times, and he said she said will get you nowhere fast in the eyes of a judge. Any and all financial agreements which were arranged between you and your spouse need to be carefully documented in writing. This is the only way to protect yourself and your finances during a divorce without raising any red flags. These written agreements will be submitted to your lawyers to better protect you both and make for less headache in the end.

Sever financial ties with your soon-to-be-ex and protect your credit

Like the countless horror stories of drained back accounts mentioned above, many divorcees have had their credit dragged through the mud while going through a divorce. If you know divorce is coming, you’ll want to inform the three credit bureaus immediately to protect your credit. And joint credit cards the two of you share will need to be cancelled, because you will not want your spouse to have access to a credit line with your name on it.

Your credit score will likely take a hit while you go through a divorce and accounts are closed, but you can work on rebuilding your credit over time post-divorce. You cannot, however, be foolish and allow your spouse to have access to your credit lines once you know you’re going to split. Like we mentioned above, divorces are messy, and spiteful spouses are notorious for doing financial damage to their soon-to-be-ex’s. Don’t become a victim to this financial tragedy that could have been prevented.

Hire a divorce attorney ASAP

This ideally should be the first step, but it’s often the hardest step for many to take to protect their finances during divorce because it’s a clear signal that the true end is near. But need not panic. Your divorce attorney is going to be your go-to for financial matters during your divorce, will ensure that all your paperwork is properly filled out and filed, and most of all, they’re on your team!

When it comes to divorce attorneys, many will accept their payment out of divorce settlement. Your divorce attorney will serve as your finance expert to help you factor in what existing costs need to come into play when it comes to the divorce negotiations. This is especially important when it comes to factoring in adequate child support payments. Of course child support should cover the cost of basic needs for the children, but it should also factor in added expenses such as childcare and extracurricular activities.

It’s important to keep in mind that the marital estate is responsible for paying the attorneys’ fees. This is not money you will need to worry coming up with or putting on a credit card that you do not have. Whatever you do, do not make side arrangements with your spouse. Allow each of your lawyers to deal with the finances, because they have your best interests at stake and are trained professionals.

Single Mom Spot is an online community for offline change. We want to help single moms live their best lives now by equipping them with resources that will help you find the information you need to make good decisions for your future. Our content is curated by single moms exclusively for single moms. 

If you have any recommendations on ways to protect your finances during divorce, we’d love to hear what worked for you.

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My name is Jenna and I am the founder of Single Mom Spot. I've been a single mom for almost 10 years now. I'm a Christian and mama to two kids that I love like crazy. I started this site because I know how difficult single motherhood can be...and also, how beautiful. I believe that single motherhood helped make me into the best version of myself as a woman and mom. My hope, is that through a connection point like Single Mom Spot, women can share their experiences and grow together. What an amazing thing if every single mom could live her best life as a woman and mother right now, in the middle of her most challenging life circumstance. How bold. How beautiful. How unforgettable. Thank you for reading and supporting Single Mom Spot.