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Nobody marries
with the expectation of failure. Married couples never
contemplate that the person they once loved could later seem to
be a stranger and perhaps even an enemy. Yet, statistics paint
an ugly picture. Approximately four out of 10 marriages today
end in divorce. In divorce proceedings, women lose financially,
their standard of living may drop as much as thirty percent in
the first year following a divorce. Men, may not suffer as great
financially, however, they tend to lose precious time with their
children.
One of the greatest contributors to divorce is the issue of
"control" - either financial or personal. Who controls the bank
account? Who sets the social agenda? When one partner to a
marriage "controls", the other partner loses their sense of
self. A divorce becomes imminent as they controlled partner
tries to regain their self-esteem.
There are several simple and logical ways to protect yourself
financially if you believe your marriage is in jeopardy:
ONE: Keep Non-Marital Assets Separate
Non-marital assets are not part of the assets divided in
a divorce. Instead, they are considered the asset of either the
husband or the wife and generally awarded to that person in a
divorce proceeding. Categories of non-marital assets include:
- property you inherit;
- proceeds from personal injury awards (eg. Worker's
compensation or accident proceeds);
- items owned prior to marriage; and
- gifts to one party rather than the family.
If non-marital assets are commingled with assets purchased
or improved during the marriage, it may not be possible to
claim the asset as yours in the event of divorce. However,
some "tracing" of non-marital assets may be possible. For
example, if a non-marital asset is sold during the marriage
and the proceeds from the sale are used to purchase another
asset, it may be possible to "trace" a non-marital interest
in the new asset. For example, if a car owned before a
marriage is sold during the marriage and the proceeds used
to purchase a new vehicle, a party may be able to claim a
non-marital interest in the new vehicle. To do so, it is
very important to retain all documents demonstrating the
sale of the asset and the use of the proceeds realized from
the sale.
TWO: Establish Your Own Credit
Make sure your name is listed on all household accounts and
investments. Establish at least one credit card in your own
name. This will help to create an individual credit history.
When you are on your own, you will have a better chance
qualifying for loans, mortgages and credit cards. These are
all important considerations after a divorce.
THREE: Review Your Financial Holdings Regularly
Maintain complete and separate records of your financial
holdings such as bank accounts, IRA's, 401K, land purchases,
and stocks. This includes assets in your spouse's name as
well. You may wish to maintain copies of these records at
your place of employment or in a safety deposit box in your
name. Records have a way of disappearing after a divorce has
been started.
FOUR :Time Your Divorce
The timing of your divorce may carry with it a significant
financial impact. For example, in a single income family,
the non-working spouse may not have earned enough money to
qualify for Social Security at the age of retirement.
However, if spouses are married at least 10 years and don't
remarry, the non-earning spouse may qualify for Social
Security benefits based on the ex-spouse's earnings when
both reach the age of 62.
FIVE: Close Joint Accounts
If a divorce is imminent, you should immediately contact
joint-credit-card companies in writing to freeze or cancel
your joint accounts. You do not want to be responsible for
your spouses' new credit card charges, particularly when
those charges may include attorney's fees. This protects
your credit. It is important to remember that, although a
creditor may freeze a joint account, the outstanding balance
must be paid off before the account can be closed.
You may also wish to close your joint bank accounts. If any
proceeds are removed, keep a carefully accounting where the
money is placed or how the proceeds are spent. You will
undoubtedly be asked for that accounting as part of the
divorce process. You can save yourself time and money by
keeping accurate records.
SIX: Hire an Experienced Divorce Lawyer
It may be very important to hire a good lawyer early in your
divorce planning process. An experienced attorney can help
you avoid mistakes that could later cost you in your divorce
proceeding. There are many lawyers to choose from so it is
important that you ask important questions in order to
choose one that is knowledgeable and right for you. Ask
about their experience in family practice and specifically
divorce. Ask the attorney to explain the legal issues as
well as the legal process in your particular county.
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