If your marriage has taken a turn for the worse, and you and your spouse have arrived at the decision to get a divorce, you are likely anticipating what your life will be like after the divorce has been finalized. Whether you and your spouse are divorcing amicably, or if the relationship has become extremely contentious, there are steps you must take to ensure that you get through the divorce as easily as possible in either event.
One of the first things you should do is to take steps to protect your finances. This can be a complicated process, particularly if you and your spouse share a significant amount of marital property, including investments, retirement accounts and real estate property. An experienced and dedicated divorce lawyer will help you navigate the divorce process and ensure that your finances are protected.
What Are the Different Types of Property?
While some states follow the concept of “community property,” which considers all property to be owned by the couple jointly and is subject to an even split in a divorce, New Jersey follows the system of equitable distribution. This means that the court will distribute the marital assets in a way that it deems fair and reasonable. When it comes to separating property, there are two main types of property that will be considered, including:
- Marital property: This includes property that has been accumulated over the source of the marriage. They are subject to equitable distribution. Examples of marital property include real estate, vehicles, bank accounts, retirement accounts, jewelry, artwork, life insurance policies and business assets.
- Separate property: This is property that one spouse acquired before or outside of the marriage. In most cases, it is exempt from equitable distribution. Examples include property that was purchased before the marriage, inheritances and gifts.
What Steps Can I Take to Protect My Money During My Divorce?
In addition to being stressful, overwhelming and emotionally draining, divorces can be expensive. This is particularly true if you and your spouse are unable to set your differences aside for the sake of coming to a swift and fair resolution. If you are concerned about how the divorce is going to impact you financially, and want to take proactive steps to protect your finances and investments, consider the following tips:
- Identify all of your assets. It is important that you know how much money you have, including bank accounts, retirement plans, mortgages, and other assets. In addition, make a list of assets that are in your name and those that belong to your spouse.
- Obtain copies of all financial statements. Start collecting this information as soon as possible, and get everything in writing. Do not rely solely on electronic copies. You never know when a vindictive spouse will try to block you from your joint accounts by changing all of the passwords, so it is worth your while to print everything out, including tax forms, bank statements, brokerage firm statements and any other financial documents that you have signed within the past few years.
- Separate your bank accounts. Now is the time to set up your own checking and savings account if you have not already done so. Close out any joint accounts you have with your spouse. This will avoid being in the position where your spouse empties out the account, leaving you with no money to pay bills or have cash on hand when you need it.
- Safeguard your valuables. If you have any personal property that is of significant value, like jewelry or artwork, and you are concerned that your spouse may try to damage or destroy it, store these items in a safe place, like a safe-deposit box or with a trusted friend or family member.
- Set up an emergency fund. This is highly recommended, even if you are happily married. However, when you are going through a divorce, you never know when you are going to need money for an emergency or an unexpected expense. If you have a savings account, you can use it as your emergency fund, or you can open a second account that is designated only for emergencies. This is a particularly important step if you are going through a hostile divorce.
- Have a general understanding of your state laws. Each state has different divorce laws, so if you are well-informed about the general divorce laws in New Jersey, you will have a better idea of what to expect. For example, New Jersey is a no-fault divorce state, which means that neither party is to blame for the marriage ending, and blame is not required in order for the divorce to be granted. New Jersey is also an equitable distribution state, which means that assets are divided fairly and equitably, which may or may not be a 50/50 split.
- Do not hide money. While you may be tempted to try to hide certain assets if you do not trust your spouse, this is never a wise or strategic idea. If it is discovered that you tried to hide assets, not only could it increase the level of contentiousness between you and your spouse, but you could face increased legal fees and a loss of credibility with the judge, which could have a negative impact on your case.
- Make sure that all paperwork is filled out correctly. There is a significant amount of paperwork that needs to be filled out, and some of it can be quite complicated. It is highly recommended that you have a divorce lawyer assist you with this process and ensure that everything is filled out properly. If important information is missing, it could impact the outcome of your settlement.
- Consider hiring a forensic accountant. This may be more warranted if you are going through a high-asset divorce, and you believe that your spouse may try to hide money from you. A forensic accountant will thoroughly examine your expenses and lifestyle and reconstruct your income and asset picture.
- Make sure that your spouse is insured. If you are the one who will be receiving alimony or child support payments, your former spouse should be insured. He or she should have life insurance in the event that your ex dies. It is also recommended that the payer has disability insurance in case he or she suffers a serious injury and is unable to work. This will ensure that you and your children continue to receive alimony and child support.
- Update your beneficiaries. In most cases, married couples name each other as their beneficiaries on insurance policies. If you no longer want your spouse to be the beneficiary, update the information on your policy and name someone else like your children, parents or a sibling.
- Take taxes into consideration. This is another issue that people going through a high-asset divorce should think about, and make sure that they are not taking assets that have not been taxed while the other spouse keeps tax-free assets.
- Try not to get too emotionally attached to your home. This may be easier said than done, but oftentimes people become attached to their home where they lived for many years and raised children. If your spouse does not want the house, you may be tempted to keep it without realizing the cost of the upkeep, maintenance and mortgage payments. A smarter choice may be to downsize to a home that is more affordable that is still in the same school district, but is more affordable to maintain.
- Consider hiring a financial advisor. If you are in the process of a high-asset divorce, or you are not particularly savvy when it comes to financial issues, hiring a financial advisor may be a smart thing to do. Having an experienced, unbiased financial advisor as part of your team will ensure that your financial interests are protected throughout the divorce process.
- Hire a divorce lawyer. If your divorce is amicable and you agree on most key issues, you may not need to hire a lawyer. However, an experienced divorce lawyer will ensure that your legal and financial interests are protected at all times. For example, a divorce lawyer can freeze accounts that are at risk, or free up funds for any daily living expenses or legal costs. In addition, if your spouse has emptied a joint account, your divorce lawyer can hold your spouse responsible for that money as part of the settlement.
Somerville Divorce Lawyers at Lyons & Associates, P.C. Protects Clients’ Financial Assets During a Divorce
If you and your spouse have decided to get a divorce, and you want to take proactive steps to protect your finances, contact our Somerville divorce lawyers at Lyons & Associates, P.C. To schedule a free, confidential consultation, call us today at 908-575-9777 or contact us online. Our offices are located in Somerville, New Jersey and Morristown, New Jersey, where we service clients throughout the state, including, but not limited to those residing in Bedminster, Parsippany, Rockaway, Short Hills, Chatham, Randolph, Madison, Morris Plains, Bridgewater, Woodbridge, Basking Ridge, Mendham, Morristown, South Plainfield, Somerset, across Somerset County, Morris County, Union County and throughout New Jersey.