I once had a client who knew the exact date and time when she separated from her spouse. I mean down to the minute. However, it wasn’t her specificity that surprised me (okay it kind of did), it was the fact that she came in to see me for an initial consult less than one day after she and her spouse separated. Most people wait a few weeks or even months. Do you know the exact moment when you separated from your spouse? How long did you wait to see a lawyer? Have you see one at all?
If you haven’t, that’s okay. Deciding to end your marriage (or having someone decide for you) is a really scary time. It is likely that your emotions are all over the place and you aren’t sure what to do next. Perhaps you haven’t seen an attorney yet. Perhaps you are so focused on your feelings and worried about your kids that you aren’t thinking about your financial health. Does this sound like you?
However, it is really important that you take certain steps to protect your finances as soon as you separate from your spouse. If you don’t it could hurt you (and your case) in the end. Not sure what those steps are?
Don’t worry, I got you!
So, before you even hire a divorce lawyer, you need to do these 8 things right now if you have just separated from your spouse.
- Pull your credit report;
- Remove your spouse as authorized user from credit cards;
- Change your passwords;
- Review and separate joint bills;
- Copy financial statements;
- Redirect deposits and automatic withdrawals;
- Let school and daycare know of separation and custody schedule; and
- Get a will.
Pull your credit report if you have just separated from your spouse.
When was the last time that you checked your credit? Ever? I recommend that my clients obtain a full credit report when they first separate to make sure that their spouse did not take out credit in their name.
You may be asking, Liz, how can my spouse take out a credit card in my name? Unfortunately it’s pretty easy.
As most credit applications can be done online, it is pretty easy for a spouse to take out a credit card in the name of their partner without them knowing it. They know all of the necessary information to complete the application don’t they? Yes that is illegal but yes it still happens.
While any debt incurred on a secret account may be distributed to the deceptive spouse in the divorce, the mere existence of the account will after your credit score. Unfortunately, it is very hard to compensate someone for a ruined credit score.
If you haven’t gotten a formal credit report in a while (or ever) I suggest that you get one so that you can fully review the state of your credit. You can’t fix what you don’t know about, right? This may also be important in terms of how you structure the property division (which includes allocating debt) and what documents that you request in the financial disclosure process.
Recently pulled your full credit report? You should still do a soft inquiry to double check your credit after you separated from your spouse.
Do you know what a soft credit inquiry is? Most people don’t. A soft inquiry into your credit is a report that gives you your score and a few details about how the score was calculated but doesn’t go into the same depth as a formal report does. It will not affect your score so you can check it as often as you would like. I like to check my score at least once a month. That way, I can spot any errors as soon as possible.
I personally use and recommend Credit Karma to all my clients. Credit Karma is free and user-friendly. It quickly checks your score with two credit bureaus and then offers advice on how to improve it. The site also has recommendations for credit cards, auto loans and personal loans based on your score.
I think that all divorcing parties should do a soft inquiry of their credit on a regular basis. Even if you are not concerned that your spouse has opened accounts in your name, you should know where your credit score stands throughout the divorce process.
This is particularly important if you are trying to improve your score to obtain a mortgage or refinance the existing mortgage on the marital home. It is best to know if you can qualify or, what you need to do to qualify for such a loan. Why waste time fighting for an asset you have no possibility of maintaining?
Understanding your financial picture can help you craft your divorce award to best suit your present financial circumstances and help build towards your best post divorce life!
If you have just separated from your spouse don’t forget to remove them as authorized users from credit cards.
Do you have any credit cards which your spouse is able to use? Meaning, they also have a card in their wallet that goes to a credit card account in your name alone?
An authorized user is different than having a joint credit account with your spouse. When someone is an authorized user on your account, they have the right to make charges on that card. However, the account remains in the name of the accountholder. Therefore, the accountholder is ultimately responsible for the payments. Also, the account is considered in the score of the accountholder and not the authorized user.
You should remove your spouse as an authorized user from your accounts as soon as possible after a separation.
Why?
If your spouse is upset about the break up, they may be inclined to run up debt on your accounts rather than their own cards. Even though these charges can be accounted for in the final property settlement agreement, this doesn’t help you if those charges evaporate your available credit and ruin your score when you need it most.
What’s worse, you are going to likely be responsible for the minimum payments on that account while your divorce is pending. And if you don’t make those payments the lender is going to come after you for satisfaction, not your spouse.
Change your passwords on all accounts and electronic devices.
When you are married to someone, you often share everything (hopefully not underwear though). I’ve even had clients who have had family email addresses and Facebook pages. This sharing also includes passwords to your phone, email and social media accounts. Sound familiar?
Or, do you you simply have the passwords for these accounts saved on your computer so that you don’t even need to login every time you want to see what your crazy Aunt Jean posted on Facebook today? I know I’m guilty as charged! I hate having to remember a million passwords for all my accounts.
However, when you do this anyone that has access to your computer can simply open up your account and view your page.
Also, just because you don’t think that your ex has access to this info, doesn’t mean that they actually don’t. What if your spouse has been concerned about infidelity for months and therefore found a way to read your Facebook messages? I’m pretty sure they wouldn’t have told you they could access your account in that scenario.
During my initial consults with new clients, I always ask my clients if their spouse has access to their social media pages, email accounts and computers. Even if they say no, I tell them to change their passwords just in case.
Seriously, change it for everything! No exceptions.
Remember to also change your cell phone passwords and text messages if you just separated from your spouse.
Also, another place where I see a lot of people get in trouble is failing to unlink text message accounts from their iPhones, Macs and iPads. I have had numerous clients tell me that their ex’s text messages still come up on the family (or worse) their children’s iPads because the spouse forgot to sever the connection. It is also a good idea to remove yourself from the family Apple ID account so that your former partner can’t use the Find My Friend function to track your movements.
What other passwords should you change if you just separated from your spouse?
In addition to changing your passwords to your cell phone and social media accounts, you may also want to consider changing your passwords for any other accounts that you have once you are separated from your spouse.
For example, does your spouse have access to your online banking accounts? What if this allows them to move money from your account to another? While, again, those monies would be accounted for in the property distribution, what are you supposed to do if you need those funds now?
Again, change it. No exceptions.
Review and separate joint bills as soon as you have separated from your spouse.
Are you and your spouse still living together? Did one of you move out? Either way, once you are separated from your spouse, it is a good idea to look at what bills you are paying jointly and start to separate them as well.
For example, are you and your spouse on the same cell phone plan? Perhaps it is a good idea to start looking for your own. While this may come with penalties that you wish to avoid, you are going to have to get your own plan eventually. Start doing your research to see if now would be a good time.
The same goes for you car insurance. If you and your spouse are no longer living in the same place you can’t really be on the same insurance policy. Why? Insurance is tied to where you live. If you are living in a different zip code and get into an accident you may have an issue with coverage. Yikes! Who wants to deal with that on top of a divorce?
While you are separating your joint bills, it may be a good time to also start reviewing your budget. Do you have enough money to live on your own and pay your expenses? While you may be entitled to child support or spousal support, you need to take a hard look at your budget and your new financial circumstances.
Don’t have a budget? You need to start thinking about one ASAP. Here are some tips for budgeting post-divorce.
Copy financial statements as soon as you have separated from your spouse.
Who paid the bills during your marriage? Were you the record keeper or did your spouse handle the finances? Do you have access to your financial statements? Do you know where they are located in the house or are they password protected on a computer?
Ah I know, what you may be saying, lots of questions about finances, I’m not ready!
Don’t worry, I’m not asking you to start dividing your property or become an accountant overnight. However, I am asking that you start gathering your financial statements to help in your eventual property distribution.
Why is this so important? A few reasons.
First, while your lawyer will be able to get these documents from the other side during the divorce process, it is a lot easier (and cheaper) to get them from your own client.
Second, a funny thing happens when you separate from your spouse. Documents start to go missing. So gathering them as soon as possible helps to prevent this.
So what financial records do you need to be on the look out for if you have just separated from your spouse?
Depending on your case, you should be gathering at least one to two years worth of the following information:
- Checking and savings account statements;
- Investment account statements;
- Retirement account statements;
- Documentation of debts, i.e. mortgages, credit cards, personal loans, etc.;
- Income tax returns;
- W-2s, 1099s, and paystubs;
- Settlement statements for purchase of real estate;
- Any documentation that you have indicating an account may exist that you were not aware of.
Don’t worry if you can’t get everything. Just being able to get some of these documents will be helpful to your attorney and save you from fighting your spouse for them later on.
Redirect deposits and automatic withdrawals as soon as you have separated from your spouse.
Do you and your spouse use a joint checking account to pay household expenses? Do you have your paycheck directly deposited into that joint account? If so, you may want to change that.
Here’s why.
If you and your spouse don’t live together anymore, chances are you are no longer paying bills jointly. Why would you put your paycheck into a joint account that they have access to? What if they use your money for their own expenses and then you don’t have enough to pay your bills?
What if they withdraw all the money out of the account? I’ve seen it happen. Do you see why changing your direct deposit is a good idea?
What if you and your spouse have decided to continue to pay your bills jointly when you first separate? This is pretty common if parties are still living together. However, if your combined income is more than what you need to pay those expenses, then there is no need to continue to deposit your whole paycheck into the account. Just put in enough to cover the bills and direct the rest of your pay to your own separate account. Why? See above.
Do you use automatic debit for things like car insurance, mortgage, utilities, etc? The same rule for direct deposits also applies for automatic debits. If you and your spouse separate your finances, you also need to redirect your bills to the appropriate accounts to avoid overdraft fees.
Let school and daycare know that you are separated from your spouse and provide them with your new custody schedule.
This one isn’t financially related but is just as important. Are you and your spouse living apart after the separation? Will who picks up the children from daycare change because you are now separated? What if the bus schedule needs to be different?
Do any of the above questions apply to you?
If so, you need to let the school and the daycare provider now of your changing life situation and how it affects your children. While it may be embarrassing to discuss your personal life with strangers, you need to make the teachers and daycare providers aware of what is going on, particularly if it involves a change to your children’s schedule.
Also, once you get a custody agreement or order, make sure that you provide a copy to the daycare or school, particularly if it affects pick ups and drop offs.
Get a will or revise the one that you already have when you have separated from your spouse.
Do you have a will? When did you get it done? Chances are, if you had a will prepared while you were married, it leaves everything to your spouse. Flash forward to today. You’ve just separated from your spouse. If you got hit by a bus tomorrow would you want them to get all of your assets?
I’m going to assume that the answer is no. So, make sure that you make an appointment to have your will changed, so that, should you pass away, your money ends up where you want it to. This is important even if you don’t think that you will have a lot of money to give away after you die.
Don’t have a will? Well, get one!
This is particularly true if you are going to be keeping or receiving assets in your property distribution. Don’t you want to make sure that those monies are gifted appropriately after your divorce? After all, you may end up spending a lot of money on legal fees to get them! Make sure they don’t end up in the wrong hands because you didn’t get a will!
Which step will you do first now that you have separated from your spouse?
While you may be focused on your children and your emotions during this initial time of transition, you can’t forget about securing your finances. A reminder of the 8 things you need to do once you separate from your spouse:
- Pull your credit report;
- Remove your spouse as authorized user from credit cards;
- Change your passwords;
- Review and separate joint bills;
- Copy financial statements;
- Redirect deposits and automatic withdrawals;
- Let school and daycare know of separation and custody schedule; and
- Get a Will.
Have a question about what else you should be doing? Let me know in the comments!
Did you just separate from your spouse? Are you new to the divorce process?
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