Divorce Financial Checklist: Preparing Your Financial Information Before a Divorce

The end of a marriage often means big financial adjustments for both spouses. Taking steps early in the divorce process to financially prepare for your divorce can help you maintain some control during this tumultuous time.

Why You Should Collect Financial Information Early in Your Divorce

A major issue in nearly all divorces is how to divide the couple's "marital estate." The marital estate includes all assets and debts acquired during the marriage. Unless divorcing spouses agree on how to divide everything, a judge will evaluate and divide the marital estate using the state's property division laws. Some states divide the estate "equally" (community property states), while others use an "equitable distribution" method, which means a fair (but not necessarily equal) division.

Before you can resolve how to allocate your assets and debts, you, your spouse, and the court must have a complete picture of your assets, debts, and expenses. To this end, most courts require each spouse to provide a detailed financial disclosure to the court and one another.

Gathering financial information as early as possible arms you with the information you'll need to make sure you get the best financial results possible, and allows you to move quickly through the disclosure process.

A Divorce Financial Checklist: What Information Do You Need?

The process of dividing the marital estate can go more smoothly and reach a resolution faster when spouses work together. But cooperation between divorcing spouses isn't always possible, and sometimes, as the divorce progresses, spouses become less willing to work with one another. So, regardless of your current relationship with your spouse, you should take steps to gather as much of the information in this divorce financial checklist as possible.

1. Assets
2. Debts
3. Expenses

1. Assets

Take inventory of all property and belongings you have, and make copies of all documentation you have regarding these items. It's a good idea to collect information about:

• wages, salaries, and other income, such as disability or public assistance
• cash
• bank accounts, such as checking and savings
• retirement accounts
• pensions
• security or other deposits placed on a rental
• home and land appraisals
• investment property income
• vehicle appraisals and titles
• business assets and income
• patents
• stocks, bonds, CDs, and other investments
• antiques, jewelry, and furniture
• insurance plans for property, vehicles, and personal items
• life insurance that has cash value, and
• any other assets you or your spouse own, including inheritances.

In addition to gathering information for the above assets, if you have children and they have a trust or custodial account, such as a Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) account, make sure you have all the details handy.

2. Debts

Before the court can divide your estate, the judge must have a complete picture of your debts as well as your assets. In most cases, if you and your spouse took on debt during your marriage, the court will evaluate it alongside your assets and assign it as required by state law. In general, when a spouse has a debt that is considered separate or unique to that spouse—such as a student loan—the court will assign it to the spouse who acquired it.

When inventorying your debts, gather information about the following—even if the debt is in your or your spouse's name alone:

• mortgages, including documents relating to lines of credit and second mortgages
• property liens
• credit cards
• other lines of credit or installment payments
• vehicle loans
• personal loans
• student loans
• rent obligations
• tax debts and liens, and
• any other debt acquired by you or your spouse during the marriage.

If you pay child support or spousal support, you should include the court-ordered information with your financial disclosures to your spouse or the court, because those payments could impact your final "gross" income for the current child or spousal support payments.

3. Expenses

One of the most stressful parts of assessing your expenses is the fact that expenses change. For example, one month your vehicle-related expenses might consist of only your car payment and fuel. The next month, though, you might have hundreds of dollars in repairs when your battery dies. Don't fret: It's okay to estimate expenses to the best of your ability.

Whenever possible, though, provide exact amounts for your expenses. When that's impossible, take a look at the past 12 months and get an idea of your average monthly costs. When you record the expense, note whether it is exact or estimated.

To prepare for your divorce and help plan your future budget, use this checklist of some common expenses you might need to track:

• rent or mortgage (if mortgage, break out your principal and interest payments)
• real property taxes
• homeowner's or renter's insurance
• home maintenance and repair
• healthcare costs that aren't paid by insurance
• medical insurance
• child care
• groceries and household supplies
• eating out
• utilities (for example, gas, electric, water, trash, and Internet)
• cell phone
• laundry and cleaning
• clothes
• education and tuition
• entertainment, gifts, and vacation
• auto and transportation expenses (for example, insurance, gas, repairs, bus, and train)
• life insurance
• savings and investments
• charitable contributions, and
• other installment payments.

If any of these expenses are paid by others—for example, if your parents help with your house payments—make note of the amount of and frequency of these third-party contributions.

How to Find Your Financial Information

One of the easiest ways to obtain information about your debt is to pull your credit report. You can access a free report from each of the three major credit reporting agencies every year. Once you receive the reports, it's essential to review each account to ensure accuracy, amounts, and payment history. You should dispute inaccurate information immediately. If necessary, you can submit a copy of your credit report to the court for evidence of joint debts acquired during your marriage.

Some other ways to pin down your financial information include:

• checking all financial statements and bills that arrive in the mail
• reviewing your credit card statement for any automatic payments, and
• inspecting past tax returns.

Create a Divorce Budget

Divorce can create financial insecurity, especially if you depend on your spouse's income to cover household and personal expenses. Most states permit dependent spouses to request financial support—sometimes called maintenance or alimony—during and after the divorce, but in no state is receiving alimony a guarantee. One of the best ways to become financially independent from your spouse during and after your divorce is to create a budget.

Start by estimating your post-divorce income. Use the information you've gathered about your expenses and debts to see how these balance against your income and assets. By doing this exercise early on in your divorce, you'll get a better idea of how much alimony you might need to request.

In addition to your monthly household expenses, you should plan for divorce-related expenses, such as court costs and lawyer fees. The court doesn't require you to hire a lawyer, but if your spouse refuses to cooperate or, if negotiations are impossible due to a lack of communication or domestic violence, hiring an experienced lawyer could greatly increase your chances of a fair divorce settlement. Also, you might be able to request an order from the court that your spouse pay all or part of your attorneys' fees and court costs, so keep careful track of everything you spend.

Additionally, you should plan and budget for possible mediation fees and, if you need to move out of your marital home during the divorce proceedings, additional rent or mortgage payments.

Hiring a Professional Divorce Team

Many divorcing spouses believe they can resolve their divorce by themselves or by hiring independent lawyers. While it's entirely possible (and preferable) to settle without a divorce trial, in some cases, it's not possible. If you believe your spouse is hiding assets or if you have complicated business income or other income or debt that makes your divorce complex, you might need to hire a professional divorce team to help you throughout the process. For example, your divorce team might include your lawyer, a certified divorce financial analyst, and a private investigator, all of whom can help you get a clear picture of the assets and debts that make up your marital estate.