The emotional cost of a divorce can have the most damaging effect on your family, but ending a marriage can also devastate your finances for years to come. Expenses for both former spouses are likely to rise, and incomes may be cut in half.
Pennsylvania is an “equitable distribution” state for dividing assets, but that doesn’t mean it will be a 50-50 split as a court will determine a “fair” distribution. The best way to prepare for your new life is to understand what your net worth is before you leave a marriage and have a handle on the expenses you expect to face.
List your marital assets
Before filing for divorce, take stock of all your assets, including:
- Savings and checking accounts
- Retirement plans
- Cash-value life insurance policies
- Stocks, bonds, mutual funds and certificates of deposit (CDs)
- Stock options
- Tax refunds
- Income including vacation pay
- Artwork and other collectibles (get appraisals where necessary)
Create a post-divorce budget
Once you have an idea of what you’ll be able to afford, make sure you know what your expenses will be, including:
- Mortgage or rent
- Car payment
- Insurance including health, auto, homeowners or renters
- Regular expenses like groceries and gas
Being informed is the best way to prepare
Now that you have a better understanding of your financial status, dig deeper into what you own and what you owe:
- Create a balance sheet: List your assets such as a home or cars and liabilities, including credit card debt and unsecured loans. Soon-to-be ex-spouses should work to pay off that debt, if possible, and close those accounts before the end of the marriage.
- Examine tax forms for the past three years: This will give you a good idea about your income and where it comes from whether it’s from a salary, stock, bonds or other income. Talk to your accountant if you don’t’ prepare your own taxes.
Seek legal advice to achieve the best possible outcome
Going through a divorce is one of the most stressful situations anyone can face, but it can also be a necessary step for a healthier and happier future. Seeking the advice of a compassionate and experienced family law attorney here in Pennsylvania can help you avoid litigation in some cases and protect your rights and financial well-being.