Navigating Divorce Finances: 7 Steps to Untangle Your Assets
So, you're embarking on a divorce journey —sorry to hear that, or congratulations, depending on your situation.
Regardless, taking a close look at your financial situation is a crucial step in preparing for the process. Let's walk through seven steps to help you understand and organize your assets effectively.
Step 1: Find and Copy Your Financial Documents
Do you have a smartphone? It's a handy tool for capturing important documents. Snap pictures or use scanning apps to create PDFs.
Collect copies of your
- driver's license,
- passport,
- credit cards,
- health insurance cards,
- bank statements,
- credit card statements,
- tax returns (last 3-5 years),
- investment portfolios, and
- loan agreements.
These documents supply a clear financial snapshot, aiding informed decision-making during divorce proceedings.
Pro tip: If you're considering a divorce financial consultation with a financial advisor, having these documents ready can make the process smoother.
Step 2: Create a Detailed Asset Inventory
With your financial documents in hand, start compiling a detailed list of all your assets—real estate, investments, retirement accounts, business holdings, and personal property such as art, furniture, and collectibles. This inventory will be the foundation for a fair and transparent asset division.
Step 3: Find Digital Assets and Intellectual Property
Don't overlook digital assets and intellectual property, which can hold significant value. Include domains, trademarks, copyrighted works, cryptocurrency, NFTs, and other digital tokens. Finding and addressing these assets during divorce proceedings is essential.
Step 4: List Your Debts and Liabilities
Examine your financial obligations thoroughly to ensure a fair and informed distribution of both assets and liabilities. Consider mortgages, student loans, credit card balances, and car loans. Remember, this is about informing yourself, not passing judgment. As the first step- take a look at my basic financial inventory – while you will need to consider all assets, this will give you a sense of what.
Step 5: Get an Up-to-Date Business Valuation
If you or your partner own a business, obtaining an accurate business valuation is crucial. Expert valuations contribute to an equitable distribution of assets during divorce.
Step 6: Explore Marital Property Ownership Structures
Understand how ownership structures impact asset division. Differentiate between separate property (owned before marriage) and marital property (acquired during marriage).
How everything gets divided depends on details like:
- Whether you are in an equitable distribution state or community property state?
- How long was the marriage?
- What are the spouse’s ages, physical and emotional health?
- What was brought into the marriage from each spouse (think income and property)?
- What was the couple's standard of living?
- Was there a prenuptial or postnuptial agreement?
- What is each spouse's income and ability to earn?
- Did either spouse contribute to acquiring, keeping or improving marital property?
- Did either spouse delay pursuing a career in order to care for children or support the other spouse?
- Did either spouse contribute to the other spouses education or earning power of the spouse?
- What are the tax consequences of the proposed property division?
- What are each spouse’s debts and liabilities?
This is particularly important for those wondering how to handle a divorce in North Carolina, though it will vary from state to state.
Step 7: Assess Professional Guidance Needed
Divorce is complex, so don't go through it alone. Seek support from:
Family Law Attorneys: Local experts who can relate your situation to local laws.
Certified Divorce Financial Analysts (CDFA): Provide support in organizing assets, understanding tax consequences, and offering clarity on settlement options.
Certified Divorce Real Estate Experts (CDRE): Assist in valuing and selling real estate property neutrally.
Therapists: Emotional support during the challenging divorce process.
Considering a divorce financial consultation in Cary to demystify the financial side of the process? Drop me a line >
Remember, this is your divorce—take an active role. A thorough understanding of your financial situation sets the stage for a smoother divorce process.
Other great resources:
Second Saturdays – a free workshop on the second Saturday of each month offering perspectives from financial, legal and mental health professionals with divorce expertise.
A place to live after divorce: renting or buying a home >
Charlotte Galamb is a financial advisor at Raymond James in Raleigh, North Carolina, helping people navigate life transitions and secure their financial futures. For more information, visit her website or email charlotte.galamb@raymondjames.com.
While familiar with tax provisions, we, as Financial Advisors of RJA, do not give advice on tax or legal matters. Discuss such matters with appropriate professionals. The information provided may not be complete or accurate and does not constitute a recommendation. Opinions expressed are those of Charlotte Galamb of Raymond James Raleigh Branch and Cary Financial Advisor and not necessarily those of Raymond James or Raymond James Financial Service.
