Marriages don’t always work out, and that’s okay. But divorce isn’t something you should rush into lightly – especially if you’ve been married a long time, and even more especially if you’re not the spouse who does the household finances. One of the most important things we tell our clients is to be financially prepared once their marriage ends, and that includes being knowledgeable about their newly separate assets.
How much do you know about your finances?
Recently, the Press-Enterprise published an article asking, if your life situation drastically changed tomorrow, would you be okay financially? And that got us thinking, a lot of our clients come to us during the divorce process and it turns out they’ve never even touched their finances outside of handing over a credit card, because their spouse handles everything.
This isn’t a good idea, folks. So let’s go through a list of some of the things you really need to know – especially if you’re thinking of getting divorced.
What’s the scope of your credit vs. your debt?
Everyone should know their credit score. It’s what can help or hinder you when you want to lease or buy a house, car, or apartment. Your credit score follow you around for about 10 years before any bad credit disappears, and companies are usually looking for scores around 720 and above. These scores are considered low-risk.
You should also know how much debt you have. Take a look at your monthly credit card statement, car payments, store cards, and other forms of credit to determine your monthly payments – can you afford these expenses on your own?
Do you have investments and benefits with your spouse?
If you have your own investments (like a 401K or other account), make sure you’re keeping a watchful eye on them. Especially in our current economy, now isn’t the time to be passive about your investments. Are you getting the best results? Could your investments be working harder for you?
The Press-Enterprise notes, “Review your statements, and if something doesn’t seem right, do a bit of research or ask for help until you feel satisfied with the answer.”
If your spouse has a pension, ensure you understand the survivor benefits correctly. Same goes with Social Security death benefits. You may be disappointed if you only receive partial benefits when you were expecting full benefits. Your spouse’s HR or pension rep can answer your questions.
Do you know your insurance limits?
Sure, you might know how much your monthly insurance payment is, but do you know what that insurance covers – and when it might run out? Many people are surprised to find out that they don’t have enough insurance, and unfortunately they find this out at the exact wrong time.
Before you make a life-changing decision like divorce, talk to your agent or financial advisor about your insurance policies, including life insurance, long-term care insurance, property insurance, and car insurance. Make sure the liability limits are sufficient and everything’s updated – especially if you’ve accumulated any valuable assets since you last looked at your policy. As Press Enterprise notes, never assume you have enough coverage. And, if you’re planning on divorcing, you may want to change your beneficiaries on any life insurance policies.
If you’ll be responsible for any payments after your divorce, remember to note these when you’re making your budget. Don’t forget to take health insurance into consideration if applicable.
Will you file your own taxes?
If your spouse is the one who’s always handled the taxes, it’s time to learn a little bit about nobody’s favorite subject. You don’t have to do your own taxes – you can have an accountant do them for you or use a professional service – but you do need to review them, because that’s your signature going on the return. Your signature means you’re the one responsible for whatever’s on those forms, so it’s important you know what they mean.
Take some time to go over your tax returns with an expert before signing off on them. Make sure you understand everything. After all, it’s your money.
Skills to take with you
You’ll also want to learn a few things as you move into your new and independent life, especially if you’re used to your spouse handling the financial stuff. Don’t worry – you got this, and that’s why we’re here.
One of the biggies is negotiation skills. If you want to buy a new car, or a new job, or a raise, you’re gonna have to negotiate. Nobody likes it, but everybody has to do it. Spend a little time reading up on and practicing negotiating skills. You can find resources online or in the library.
Another important, if not the most important, is ensuring you protect yourself during the divorce. One of the best ways to do this is having an experienced Knoxville divorce attorney on your side. Our lawyers sit down with you to discuss your post-divorce goals, and then design a roadmap on how to get there. We’ll walk you through every step of the process, provide a thorough explanation of how everything works, and help you start your new life in the strongest way possible.
Remember, knowledge is power!
The family law attorneys at LaFevor & Slaughter are here to answer all your questions about divorce, separation, and everything else. We want to ensure you have all the information you need and feel confident and secure the entire way. When you’re ready to schedule a consultation, you can call our Knoxville lawyers at (865) 637-6258, or complete our contact form.
Patrick Slaughter is an experienced Knoxville attorney passionate about helping families resolve legal issues including divorce, family law matters and immigration. Patrick graduated from Lincoln Memorial University – Duncan School of Law, summa cum laude and is a published author. Patrick is a member of the Knoxville Bar Association as well as the Tennessee Bar Association. Contact Patrick Slaughter at (865) 637-6258 or by filling out a case evaluation below.
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