9 Steps to Take When Preparing for Divorce

Find a Divorce Attorney

It is easier and less costly if you and your spouse are able to settle without litigation. "The simple idea is, don't spend 10 to get 5, both financially and emotionally," says Emily E. Rubenstein, a Beverly Hills, California-based divorce attorney. In other words, says family law attorney Sabrina Shaheen Cronin, "Attorneys should do a better job of counseling their clients to show them the pros and cons of ongoing litigation. For instance, if it costs $10,000 in attorneys’ fees to 'win' some assets worth $5,000, you would have been better off walking away from that asset and negotiating something else."

As an alternative to going to court, consider whether a collaborative approach or mediation may work best for your needs. A collaborative approach is "for couples that want to stay out of court but have complex issues (and lots of money)," says Erin Levine, founder, and CEO of Hello Divorce, a service that guides clients through the divorce process through self-help software and access to legal experts. "Several professionals are involved – ranging from lawyers and financial planners to a co-parenting counselor – all with the goal of reaching an agreement outside of court."

In mediation, "The parties work with a neutral mediator who helps them to resolve the key issues in divorce (co-parenting, support, property and debt)," Levine explains, adding that sometimes spouses will consult with their own lawyer throughout the process. "When you work with a lawyer in this capacity, it’s called legal coaching," Levine says.

"Non-lawyers also don't often realize that litigation has a very high emotional cost," Rubenstein says. "Paying for attorney preparation time, hours in court, plus costs like filing fees and other services often adds up to more than the fight is worth."

Gather Financial Information

Next, you need a clear picture of where your finances stand, which will help determine the distribution of marital assets and debts.

Determine What You Own

Some marital property and assets are obvious. For example, the marital home, any financial accounts, and vehicles are assets that should be split equitably. Other not-so-obvious assets may include artwork, pension plans, inheritances, or belongings brought into the marriage.

Consider intellectual property and overseas assets as well. "Since our practice is in Los Angeles, we often deal with issues of intellectual property, for example, music and film rights. Intellectual property assets can tend to be overlooked," Rubenstein says. "Sometimes parties will overlook assets which are held abroad, thinking a U.S. court does not have jurisdiction over such assets," says Dorit L. Goikhman, Esq., an attorney-mediator and founder of Off the Record Mediation Services. Other common overlooked assets include cryptocurrency; unvested stock options; tax refunds; airline miles and loyalty points; subscriptions and memberships, Levine adds.

Gather all documentation regarding each asset, including the present value, when and where the asset was purchased, and whether it was purchased with joint or separate funds. You will especially want a copy of any recent real estate appraisals. Turn all documentation over to your attorney and be sure to keep a copy for yourself.

Determine What You Owe

Although it varies by state, marital debt tends to be split equitably, not by whose name the debt is in. The easiest way to determine marital debt is to get a copy of your credit report. Any debt you have will be listed on your report. 

Once you determine what debt exists, obtain statements on all open accounts with the balance due showing. When you turn this information over to your attorney, don’t forget to keep copies for your files.

"During the divorce itself, it is important to gather all financial information, including assets and debts. If you want to do your homework ahead of this first meeting, you could bring proof of income for both parties, tax returns, mortgage statements, credit card statements, savings account statements, automobile payments, utility bills, etc. and if children are involved, then you should know the cost of daycare, educational expenses, a general idea as to your desired parenting time and custody arrangements," Cronin says. However, if you don't have all the information, an attorney can help you work through this.

Determine Income

You need documentation showing your income and the income of your spouse. If you and your spouse are salaried employees, you will need a copy of the most recent pay stubs plus your most recent Income Tax Return.

Determining income becomes more difficult if your spouse is self-employed. In such a case, copies of bank account statements and financial business statements will provide a clear picture of income. You may be able to get an idea of how much your spouse actually makes but, it can be almost impossible to determine true income when a spouse is self-employed. Gather what information you can and your attorney can help obtain the rest through the discovery process. Remember to make copies of any statements for your records.

Prepare an After-Divorce Budget

Determine what you will have to live on once you are divorced. Some individual's incomes drop drastically after divorce, and Levine says it happens for a number of reasons. "One spouse leverages existing credit to ‘buy out’ or equalize the other spouse’s interest in an asset; during separation but before the divorce, there wasn’t clarity around who would pay what bills–bills became overdue or late; one spouse (earner spouse) doesn’t pay bills in the other spouse’s name out of spite," Levine explains. Or, "Credit was tied to their spouse–meaning, all of the credit/accounts were issued in one spouse's name either because that spouse had control issues or because the other spouse had bad or no credit."

Revising your expenses will influence how you negotiate your divorce settlement in terms of what your options are or what you might ask for should your case go to court.

If Necessary, Establish Your Own Credit

If you don’t have any credit in your name alone, establish some now by obtaining a credit card opened in your name only. "Either party may find that they have difficulty getting approved for bank loans because their credit was either tied to their former spouse, or to a joint income," Goikhman says. "When parties get divorced, they also often take on additional debts, which can negatively affect their debt to asset ratio, and they also often have increased overall costs of living due to the need to support two separate households on the same income."

Once you have a credit card in your name, use it sparingly and make sure you are able to pay off the balance in full each month. The goal is to establish a good credit score, not to run up a bunch of debt. 

Evaluate and Protect Financial Accounts, if Necessary

It isn’t uncommon for a spouse to raid financial accounts after learning there is an impending divorce. Sometimes it is done out of anger, sometimes it is done on the advice of an adversarial attorney. If you fear your spouse doing such a thing you can protect yourself by opening accounts in your name alone, remove half the funds from the joint accounts, and deposit them into your new accounts.

Do not hide the fact that you have done this and do not spend the money foolishly. Document every penny you spend so that you can account for it during settlement negotiations or in court. If you have savings accounts, money market accounts, or any type of investment accounts and you fear your spouse will tamper with those, consider having the accounts frozen. You should, of course, discuss with your attorney any action you plan to take regarding joint financial accounts.

Close Joint Credit Accounts

When possible, close all joint credit accounts before you separate. Closing them before divorce proceedings will keep an angry spouse from using the account and running up charges that you may later be held responsible for.

Offer to close the accounts by paying a smaller amount than is owed. If this is done, get a letter from the creditor that the account has been paid in full and a written promise that they will not file anything derogatory about the account to the credit reporting agencies.

If you are not able to pay off or come to a settlement agreement regarding the balance owed, you should have the accounts frozen. This will keep you from being able to use the account but will also protect you in the end. Once the divorce is final, the balance owed on the account can be transferred to the party the court holds responsible for the debt. If the responsible party does not pay the debt, it will not affect your credit score.

Contact and alert creditors to the fact that you are going through a divorce. If there is a change of address, make sure they know it so that you will continue to receive bills from all joint accounts.

Above all, make sure all credit card bills are being paid to avoid damaging your credit, even if you have to pay the minimum on accounts you know will ultimately be your spouse's responsibility. Divorce proceedings can take months and all it takes is one late payment to hurt it.

Don't Make a Move

One of the most common questions attorneys get from clients considering divorce is whether or not they can move out of the house. Unless there is abuse, the general recommendation is to stay in the marital home. Moving out of the marital home may have a negative impact on your case.

Moving Could Affect the Interest You Have in the Marital Home

If you move out and your spouse pays the mortgage the entire time your divorce case is pending a judge may factor that into any decision he/she makes about property distribution. If you must move, try to continue to pay a portion of the mortgage payment, and document any payments you make toward the mortgage.

Moving Could Affect Your Kids' School

If you have school-aged children and you hope to be able to remain in the marital home until they finish school, the last thing you want to do is leave the home. If your spouse's income is greater than your income and you want to negotiate them paying part or the entire mortgage, you may lose your ability to negotiate keeping the home once you leave it.

If there is a history of domestic violence, discuss it with your attorney–they may be able to legally have your spouse removed from the marital home. In some states, a judge will consider a motion from your attorney for temporary possession of the marital home pending divorce court. If there is abuse and you are unable to get an order of temporary possession, take whatever steps you need to protect yourself, including leaving the home if you feel you are in danger.

Be On Your Best Behavior

Divorce can mean being put under a microscope. If your case goes to court, you don’t want to give your spouse leverage. So, don’t behave in a manner that is going to cause your divorce to be more financially burdensome. 

That might mean refraining from dating, partying, or any situation a judge might view as questionable. If custody is an issue in your case, prioritize your children and focus on meeting their needs.

Spend time with friends, family, and your children. Stay close to home, take care of yourself physically and emotionally, attend to your spiritual life, and most of all, whatever you do, be above reproach.