February is often seen as a month of romance, a time to be swept away by heart-shaped boxes of chocolate, intimate dinners, and the rush of butterflies that accompanies new love. Not many people appreciate the irony that Valentine’s Day follows on the heels of January, known as “Divorce Month” in legal circles. January typically sees the highest number of divorce filings as many couples wait until after the December holidays to call it quits. If you are among those navigating a divorce, we offer a few vital tips to help protect yourself.
Legally Establish Yourself As ‘Separated’
Establishing your separation in writing and legally is one of the first and most crucial steps. If you and your partner have separated but the divorce proceedings are drawn out, legally separating will ensure that any income you earn after the fact is entirely yours. Without a legal separation, your soon-to-be ex could lay claim to half of any money you make.
Split Your Debts
If you are no longer sharing a marriage, why would you share a credit card? Jointly held accounts can be accessed by either party, so it is best to pay off and close those accounts. If you can not fully pay them off, dividing the remaining debt and transferring it to individually held cards is another good option.
Budgeting is a crucial and often overlooked step; ensuring you have a budget is key to any major life decision. In addition to splitting assets, divorce means splitting expenses. After the pain of divorce proceedings, being unprepared to meet daily living expenses can feel overwhelming. Making a list of your recurring payments such as rent or mortgage, vehicle lease or finance payments, subscriptions, utilities, food, entertainment, and credit card bills will allow you to live within your means with a single income.
Make a Tax Plan
Despite their guaranteed status in life, taxes and their implications are frequently forgotten when dividing assets. In addition to changing your filing status, the division of assets comes with a division in tax burdens. The tax implications of different types of assets could lead to surprise financial burdens and the loss of much of an asset’s value to taxes.
If you or a loved one are going through divorce and need financial advice, contact us today. LK Daily Money Management offers an experienced hand to help to guide you through these difficult times.