Five Financial Facts to be Aware of Before Your Divorce

DIVORCE GRAPHICThe costs of divorce are many. There's the emotional cost of the breakdown of a family, the pain of a failed marriage and the anger that can come with the reasons for the split. Divorce can take a physical toll, too, as the stress of it all wreaks havoc with your sleep, your blood pressure and your immune system.

There's also a financial cost, sometimes a great cost. Divorce can be disastrous for your finances. Surviving divorce means going into it forewarned and informed.

At Harbor West, we have helped many clients through this heartbreaking transition, sorting out the financial issues to help ease their minds. The divorce might be breaking their hearts, but with some sound financial advice, it doesn't have to break their bank accounts.

Here are five financial factors to think about when you're facing a divorce, and ways to prevent common pitfalls.

Credit cards and bank accounts

When you know for sure you're headed to a divorce, cancel all of your joint credit cards immediately so no further charges can be made. Depending on the card company, you may have to pay off the balance before you can close the account, but there will be no chance of your spouse running up further debt and leaving you with it.

Closing your joint bank accounts is easier. Either one of you has the right to withdraw the entire amount without notifying the other, so do it as soon as possible or you could find yourself cleaned out. 

Division of property

Not having a clear picture of marital assets is a sure way to lose what's rightfully coming to you.

Before setting the divorce process in motion, make a list of all your marital assets, including your home, cars and other big-ticket items like boats. Remember to include retirement plans, insurance policies, any stocks or stock options. Then dive deeper. What about accumulated vacation pay? Bonuses from work? Frequent flier miles? Antiques? Artwork?

Also, get your spouse's salary, bonuses, stock options and other information from his or her employer in writing.

Armed with that information, we can assess the value of your assets, even taking tax implications into account, giving you a clear financial picture of what you'll be facing.

Child support and alimony

Child support payments are generally set by the state where you live, but factors include both parents' incomes, the number of children involved and custody agreements. While the non-custodial parent is legally mandated to pay child support, it doesn't always happen. Alimony is paid to the spouse who earns less — the stay-at-home mom whose husband has walked away, for example — but laws vary from state to state.

Your credit report

Divorce itself will not hurt your credit score, but indirectly it could cause that all-important number to drop. The chaos of divorce proceedings can lead to missed payments. Also, a judge can declare your spouse responsible for some joint credit accounts, but there's no guarantee he or she will pay them. Also, keep a close eye on your credit report to ensure your spouse hasn't opened any new accounts in your name.

Loose ends, post-divorce

When your divorce is final, it's not over and done. You still need to tie up some critical loose ends. Cross the Ts and dot the Is. Change the names on the deed to the house, stocks, car titles and any other documents. Change your beneficiaries on life insurance, employer-sponsored retirement savings accounts and your will.

Protect yourself from these potentially devastating financial ambiguities by having a strong financial plan in place. We can help you with that.

This information is provided for general purposes and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however no warranty can be made as to its accuracy or completeness. Before acting on any of the information, please consult your Financial Advisor for individual financial advice based on your personal circumstances.


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Regulatory Disclosure: The information on this website has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. This website is neither an offer to sell nor a solicitation to buy any securities. Gerard Gruber offers Securities and Investment Advisory and Financial Planning service through Geneos Wealth Management, Inc, Member FINRA/SIPC.  Investments are not FDIC insured. Investments are not deposits of the financial institution and are not guaranteed by a financial institution. Investments are subject to investment risks including loss of principal amount invested.