Things to Do Now
“What should I look out for?” John says as he twists nervously in one of the big winged-back visitor chairs in his divorce lawyer’s office.
Ways to Take Charge of Finances
“That’s a question I get from a lot of my clients,” says Henry, putting a thumb under his suspenders. “I tell them there are certain things I have seen over the years that they may experience in their case. Some of them have to do with protecting assets and others with protecting yourself and your privacy.”
Bank Accounts
“Do you have joint bank accounts?” Henry asks.
“Yes, we have a joint savings account and a joint checking account that we use to pay the household bills,” John says.
“I’ve had cases where the spouse cleaned out the bank accounts.”
“She wouldn’t do that,” John says.
“You know her better than I do, but I wish I had a nickel for every client who sat in that very chair and said that. She may not be that way, but her attorney may convince her to take all the money. Some of those clients called me to follow up to say, ‘You’ll never guess what happened.’”
“So what do you recommend?”
“Take half the money out of the accounts and open a new account in your name with it. Then, tell your wife what you’ve done on my advice, but only after you’ve done it.”
“Won’t the judge be angry with me?”
“Maybe, but it’s easier to give the money back—if the judge orders you to—than it is to get it back if your wife takes it first.”
“Then how do we pay the bills?”
“That’s what we have to negotiate. You don’t want your children and their mother left out in the cold. So you’ll have to give your wife some money to get by on. The judge will make you do that anyway.”
Tip Take half the money in joint bank accounts now before your spouse takes it all.
Stocks, Money Market Funds, Certificates of Deposit, and Brokerage Accounts
Henry begins polishing his wire frame reading glasses. He asks John, “Do you own any stock outside of your pension plan or IRA?”
“Yes, we have an account at Schwab,” says John.
“I assume it is in joint names?”
“It is,” says John, glumly.
“Call your broker. Tell him you want to divide the account equally and put half of it in a new account in your name alone. Different stocks have different tax burdens associated with them. So you want your broker to divide each stock holding equally or make sure the tax basis is equal.”
Credit Cards
“Are the credit cards in joint names?” asks Henry as he leans back in his leather swivel chair and puts his fingertips together making a steeple with hands.
“The Visa, MasterCard, American Express, and some gas cards are,” says John.
“Just like with the joint bank accounts and stock accounts, what if your wife goes on a giant shopping spree tomorrow with the credit cards and spends thousands of dollars?”
“That would be a rude awakening.”
“Yes, and you may be responsible for paying all or part of the debt.”
“So, what do I do?”
“Call each credit card company and tell them you want to close the account because you are getting a divorce. Don’t worry. This won’t be the first time they’ve heard that and they will know what to do. You can ask them to reopen an account in your name alone if you wish. To be on the safe side, send a letter, return receipt requested, confirming your instructions. Keep a copy of the letter. You will still have to make payments on the old account, but there will be no new charges from your spouse. Let your spouse know what you have done so there will be no surprises when the joint card no longer works.”
“Wow, I never thought there were so many things to worry about,” John says.
“Oh, there’s more,” says Henry. “Much more.”
“You might as well give me the whole list. Do you have a piece of paper? I want to take notes.”
Henry tears off a couple of yellow-lined sheets from his legal pad and hands them to John. John takes notes as Henry gives him the following list of various additional steps that he might need to take in order to prepare for his divorce.
Tip Call the credit card companies and tell them you are going through a divorce and want to close joint accounts and open new separate ones.
Loans and Lines of Credit
You’ll want to contact the banks and any other lenders that have given you and your spouse any ability to borrow on joint loans, a home equity line of credit, or other lines of credit that you and your spouse can borrow on with one signature alone.
Explain your situation to the lender, and ask her to close the line so there can be no further borrowing. Follow up with a letter and keep a copy.
Another way to stop your spouse from any further borrowing on these lines of credit is to withdraw the money yourself up to the loan limits.
Health Insurance
You might be tempted to drop your spouse from your health insurance policy to save money—or to do so out of spite. This is a bad idea. First, most policies have individual coverage and family coverage, so if you drop the family coverage, you are not only dropping your spouse but your children as well.
If a member of your family experiences a serious illness or other catastrophe, you may be responsible for the bills. Medical expenses for children may be assessed against a noncustodial parent as child support. Medical expenses for a spouse may be assessed as additional alimony.
If you have group health insurance through your employer, your spouse is no longer your spouse at the date of divorce, and so they are not included in family coverage. However, an ex-spouse can keep the group health insurance for up to 36 months after the divorce for an additional premium. Children continue to be covered under the family plan until age 26.
Life Insurance
You may want to consider changing the beneficiary on your life insurance policy, especially if there are no children involved. Just contact your agent or the insurance company for the right form.
However, if you do have children and you change the beneficiary from your wife to your children, your wife will still get the money as the children’s guardian in the event of your death.
Life insurance is usually used to secure payment of alimony and child support in divorce settlements, so you may want to keep any life insurance you have and not cancel it right now.
Bills
It’s time to take a hard look at the family expenses. If you are separated, that means the income that previously paid for one household must now cover two. Usually, as the old army saying goes, “There is not enough blanket to cover the cot.”
You are going to have to cut costs and cancel anything that is not a critical requirement like extra cell phones, Netflix subscriptions, gym memberships, or premium cable channels. Hold a garage sale for things you don’t need and raise some cash.
Don’t, however, cut off the utilities at the home of your spouse and children without plenty of notice. A judge won’t like the spouse who cuts off heat and light in the winter for the other spouse and children.
Retirement Accounts
If you are making contributions to a retirement account like a 401(k) plan or an individual retirement account for yourself, you should be aware that these contributions are marital assets that can be divided by a divorce court. That means your spouse may share in contributions made before the separation or divorce.
To avoid this, you should stop making contributions until after the divorce. You will probably need the extra money to go to your paycheck soon anyway. Your employer will have a form for you to fill out to stop your 401(k) contributions. And you can stop making contributions to your IRA.
Snooping: How to Find Information Legally
It’s OK to gather divorce information and evidence by looking in files, drawers, automobiles, checkbooks, and briefcases that are in your home. You can make copies and replace the original documents.
You can also check home computers and laptops in your home if you know the passwords because there is no expectation of privacy for these items. You can open mail addressed to both spouses jointly, but don’t open your spouse’s individual mail unless you have permission to do so.
You can access telephone bills, bank account statements, and pension plan statements online if they are jointly owned or if your spouse has given you his username and password and has no expectation of privacy.
Some states require both parties to consent to recording a telephone conversation on a topic. Some require only one party to consent. Even in those states that require consent from only one of the two, you can still be sued for invasion of privacy for recording a conversation. Information left on answering machines can be used as evidence in court because the speaker knows they are being recorded.
Inventory and Safeguard Your Stuff
In one of my cases, a husband told his wife to leave their home, and she did. Then, he started noticing that more and more things were missing from the house each day. First, the towels; then, the silverware and china; then, his coin collection.
He called me, and I told him there was nothing he could do. As long as the wife is on the deed, she can come and go as she pleases. She can also move the items that belong to her and even those that belong to both parties. Although it will all get sorted out in the divorce, that may be a year from now.
This is why you need to inventory every item in the house: furniture, appliances, draperies, jewelry, clothes, and everything else. Make a video or take pictures of these items. Record the date of your inventory.
This will give you a record and evidence of your belongings in case something turns up missing.
Collections and Other Valuables
If you have collections, expensive jewelry, original pieces of art, items of sentimental value, money, or any other valuables, you want to move these to some place safe, like a friend’s house, a safe deposit box, or a storage locker. The objective is not to hide these items but to protect them from your spouse.
Documents
One client had made a list of everything he owned on one sheet of paper. He had made several investments in private businesses over the years. They were all speculative and unsuccessful.
Yet, he had put monetary values on the list that were wildly optimistic. His wife went through his desk, his briefcase, his car, his cell phone records, and his laptop for evidence to use against him in a divorce. This list became the centerpiece of her settlement negotiations and no doubt would have been admitted into evidence at trial if the case had not been settled.
He would have been wise to move his records somewhere else, like his office or a friend’s house.
Safe Deposit Boxes and Storage Units
Open an account for a safe-deposit box to store your valuable documents and property. You may also need to rent a storage unit for larger valuables like artwork collections.
If your spouse has access to your safe-deposit box or storage unit, make a list of the items in them and photograph or video everything for evidence in case something turns up missing later.
There is a special “ten-year rule” that applies to Social Security: if you and your spouse have been married for at least ten years, you can use either party’s work record, whichever is greater, to determine your Social Security benefits.
Those benefits will be available to you as a divorced spouse if your ex-spouse retires or reaches age 62, whichever comes first, or becomes disabled, and you
- have been married at least ten years
- are unmarried (if you remarried, you will still be eligible if the new marriage ends in death, divorce, or annulment before you apply for benefits from the previous marriage)
- are age 62 or older and have been divorced for at least two years
If you ex-spouse dies, in order to receive benefits as the surviving divorced spouse, you must
- have been married for at least ten years
- be at least age 60 (or 50 and disabled) at the date of her death
- be unmarried (or remarried under certain conditions)
If you have been married for almost ten years and your spouse has earned more over their career than you, you should file for a divorce after your tenth anniversary so you don’t miss out on these important benefits.
Tip If your spouse has earned more than you over his career, and you have been married nearly ten years, wait until your tenth anniversary before filing for your divorce.
Your Will and Powers of Attorney
In the event of your death before your divorce, your joint property will go to your spouse, and your other property will go to your spouse and children if you don’t have a will.
Even if you make a will that leaves out your spouse, a spouse can take a portion of your property against the terms of the will before the divorce or settlement agreement. You still may want to make a will to govern the part of your estate that your spouse cannot take.
If you already have a will, take a second to review it. If you have left everything to your spouse, then you probably will want to have a new will prepared or make a codicil, which is an amendment to the original document. If you have given any powers of attorney to your spouse, revoke those immediately. The same goes for any advance medical directives.
Domestic Violence
If your spouse physically harms you or your children, or threatens to harm either party, you can file criminal charges and also obtain a protective order or injunction that will put her out of the house.
File a petition for a protective order with the court as soon as you can after the abuse happens. Most courts have forms for this at the courthouse, and the clerks will help you fill them out. Shortly after you have completed the forms, you will speak with a judge that same day. Tell him about what happened and any previous incidents of domestic violence.
The judge, if you ask, may grant an order that requires your spouse to leave the home temporarily; require the abuser to stay away from you and the children at home, school, and work; provide for support payments; and give you temporary custody of the children. The judge will also schedule a hearing where you and your spouse can both testify about what happened together with any witnesses. The judge may then continue or dismiss the protective order.
Once you have filed for divorce, you can also ask the court to prohibit your spouse from taking money out of the bank, disposing of marital assets, or running off with the children.
Some states have automatic injunctions that apply when the case is filed. In other states, you have to ask for that relief, and, usually, there will be a hearing.
The penalty for disobeying an injunction can be harsh. You can be required to pay your spouse’s attorney's fees. The court may not allow you to defend or prosecute your case. You can go to jail. Even if none of this happens, the judge may not trust you if you disobey a court order.
Any allegation of domestic violence will be taken seriously by the court. Out-of-control rage can lead to serious injury or death. But abuse is sometimes hard to prove. It occurs behind closed doors, and it is the word of one spouse against that of the other. If you are the victim of abuse, you should call the police, get medical attention, and have pictures taken of any injuries to use as evidence.
In a few cases, people are tempted to exaggerate or even make up allegations of abuse to get an advantage in the divorce or get a spouse out of the house. You should avoid any form of conflict, control yourself, and walk away from any provocation. But if you find yourself in a situation where you are defending yourself against false allegations of abuse, you need to explore whether your spouse provoked the incident, could have walked away from the conflict, called the police, or sought medical help.
Find a Lawyer (and Make Your Lawyer’s Job Easier)
It may come as no surprise that there are good divorce lawyers and bad divorce lawyers. Ask around to find a good one. Good attorneys are usually found by word of mouth. There are also Internet sites that rate attorneys and publish profiles like www.lawyers.com, www.avvo.com, and www.superlawyers.com.
A lot of people make the mistake of thinking they want a “shark” for a divorce attorney, thinking the shark’s teeth will benefit them. That is not the way to handle a divorce. A shark will run up your bills and accomplish little else. Find someone who has some common sense and can be practical about your case.
Schedule an appointment for an initial consultation with the lawyer as soon as possible. It will usually cost you between $200 and $500 dollars for an hour of the lawyer’s time, but you will most likely receive valuable information and advice about your case.
If you determine that this is the attorney for you, discuss fees with her. Attorneys charge by the hour and require a retainer, or advance payment, for divorces. The attorney will give you a written fee agreement.
Tip Don’t sign anything your spouse wants you to sign until your attorney reviews it first.
War Chest
A divorce takes lot of money. You need will need money to hire a lawyer, pay the costs of filing fees, transcripts, and expert witness fees. If possible, start saving for these expenses. We know one client who saved the cash she found in the pockets of her husband’s pants every night. If you have to borrow money from a relative or a friend, sign a promissory note to show that it is a loan. You want to show that it is a debt that needs to be repaid when the court considers property division, and you want to show that it is a loan and not a gift so the court won’t consider it as income when deciding support.
Divorce Calendar
You will have many dates to keep track of in your divorce, like court deadlines and lawyer meetings. You may also track visits with the children to have a record if your spouse is denying you access to them. You can use extracurricular events and meetings with your children’s doctors, teachers, coaches, and tutors to show that you are an involved parent.
Divorce To Do List
The period of your divorce can be a confusing time. You need to stay focused. It is also important to keep moving forward and not get bogged down or dispirited by everything you have to do. Organize and prioritize your next steps with a to do list. List everything you have to accomplish. Then mark off each item as you execute your list.
Divorce Notebook or File
There will be lot of papers coming to you in a divorce. One of my favorite ways to organize these is with a three-ring binder, tabs, and a hole punch. Keep all papers in order of time received, and create an index.
Alternative types of file folders also make a good organization system, especially those that have metal prongs to hold your papers neatly in order.
If you want, you can set up different files or different notebooks for different papers. You may make one for correspondence, one for agreements, and one for pleadings.
History of the Marriage
Preparing a brief written history of your marriage will help your lawyer get up to speed quickly on your case. It will also save you money because the lawyer won’t need to dedicate time to finding out the basics of your situation. Include the following information:
- how you and your spouse met
- details about the courtship
- the date and place of marriage
- whether or not there was a prenuptial agreement
- whether or not it was the first marriage for both parties
- the names and birth dates of children
- details about both spouses’ employment
- a description of problems in the marriage
- the date of separation
- both spouses’ ages and state of health
Financial Statement
Clients tend to think that 90 percent of their divorce is about determining who was at fault, and so they spend 90 percent of their time on that. Lawyers and judges know that 90 percent of a divorce is about support and dividing property.
Some courts require that the parties submit a financial statement consisting of assets, liabilities, income, and expenses. Whether your jurisdiction requires it or not, prepare one early in your case.
A mediator will ask you to fill out financial forms at the first mediation session and bring them back for the second session. A lawyer will ask you about your finances at the initial conference. Completing a statement of them early on will allow you to focus your attention on the important aspects of your case, show you which items will need more investigation, and help you and your lawyer to be on the same page of the hymn book.
Tip 90 percent of a divorce is about finances, not fault. Spend your time and effort accordingly.
Summary
Taking some steps early on to protect yourself will save you problems down the road in your divorce. Next, we’ll discuss how to organize your research and the documents you will need for your divorce.