How to Protect Your Finances During a Divorce

July 24, 2023by Adam Sacks

How to Prepare Your Finances for a Divorce

Taking steps to protect your finances can help you navigate the divorce process with greater ease and set the stage for a more stable future. Here are some important considerations to help you prepare financially for a divorce:

Understand your financial situation: Begin by gathering all relevant financial documents, such as bank statements, tax returns, credit card statements, mortgage documents, and investment account statements. This will provide a clear picture of your marital assets, debts, income, and expenses. Knowing where you stand financially is crucial when negotiating a settlement or preparing for court proceedings.

Consult a divorce attorney: Enlist the help of a qualified divorce attorney who specializes in family law. They will guide you through the legal intricacies, ensuring that your rights are protected in terms of the division of assets, child support, alimony, and other financial matters. A divorce attorney can also help you understand the specific divorce laws in your jurisdiction.

Assess separate and marital property: Identify which assets are separate property (owned before the marriage) and which are marital property (acquired during the marriage). Separate property typically remains with the original owner, while marital assets are subject to division. Understanding what assets are at stake will be crucial during negotiations or court proceedings.

Close joint accounts and establish individual accounts: As soon as possible, close any joint bank accounts and open separate bank accounts in your name. This will help you maintain control over your finances and protect yourself from any irresponsible financial decisions made by your spouse. Be sure to redirect any direct deposits or automatic payments to your new individual accounts.

Review credit reports: Obtain copies of your credit reports from all three major credit reporting agencies and review them carefully. Look for any discrepancies or joint accounts that need to be addressed. You should also consider monitoring your credit going forward to protect against any unauthorized activity.

Create a budget: Assess your individual financial needs and create a budget that reflects your new circumstances. This budget should include all necessary expenses, such as housing, utilities, insurance, and childcare, as well as any legal fees associated with the divorce. Having a well-defined budget will help you manage your finances more effectively during and after the divorce.

Consider the tax implications: Divorce can have significant tax consequences, so it’s essential to consider these implications. Consult with a tax professional to understand how your tax filing status will change and if any potential deductions or credits are available to you.

Update your estate planning documents: During a divorce, it’s vital to update your estate planning documents, such as your will, power of attorney, and beneficiaries on life insurance policies and retirement accounts. Review these documents with an estate planning attorney to ensure they reflect your current wishes and protect your financial interests.

Seek the advice of financial professionals: Consider consulting with a financial planner or financial analyst to help you create a long-term financial plan. They can provide guidance on investments, retirement planning, and overall financial health during and after the divorce.


Legal Steps to Take After Divorce


Separating Property

One of the most significant aspects of a divorce is the division of joint property. Whether it’s a family home, retirement accounts, or joint investments, determining how assets will be divided can be a complex and emotionally charged process. To protect your financial interests during this time, understand the concept of separate and marital property and take the necessary steps to separate your finances effectively.

Separate property refers to assets that belong to one spouse individually and are not subject to division during a divorce. Generally, separate property includes assets owned prior to the marriage, inheritances, gifts, and personal injury settlements.

Marital property includes assets acquired during the marriage, such as income earned by either spouse, jointly owned real estate, shared bank accounts, and investments made during the marriage.

In most cases, marital property is subject to equitable distribution, which means it will be divided fairly, though not necessarily equally, between the spouses.

To navigate the separation of property successfully, consider the following steps:

Evaluate the individual ownership of assets: Carefully review all assets to determine if they are separate or marital property. Keep in mind that commingling separate property with marital property can potentially change its classification, making it subject to division.

Document and value marital assets: Accurately documenting and valuing marital assets is crucial for fair division. Consult with professionals, such as appraisers or financial analysts, to determine the value of real estate, businesses, or valuable assets that may require expert evaluation.

Negotiate a settlement or seek court intervention: Depending on your situation, you may have the option to negotiate a settlement agreement with your spouse, outlining how the assets will be divided. If negotiation isn’t possible or unsuccessful, you may need to seek court intervention, where a judge will make the final decision.

Consider Tax Implications: Dividing marital assets may have tax implications. For example, selling certain assets may lead to capital gains taxes. Consult with a tax professional who can help you understand the potential tax consequences of various asset division scenarios. This will help you make informed decisions and avoid any unexpected tax burdens.

Besides tangible assets, it’s important to consider intangible assets as well. This may include retirement accounts, investment portfolios, and even intellectual property such as patents or copyrights. These assets hold significant financial value and should be included in the inventory to ensure that they are properly accounted for during the division process.


Retirement Accounts and Pensions

Retirement accounts, such as 401(k)s, IRAs, and pensions, are typically considered marital property if they were accumulated during the marriage. This means that both spouses have a claim to a portion of the account balance or future benefits.

When it comes to dividing retirement accounts and pensions, there are a few options available. One common approach is to use a Qualified Domestic Relations Order (QDRO), which is a legal document that details how the assets will be divided. A QDRO allows for the transfer of funds from one spouse’s retirement account to the other spouse’s retirement account without incurring taxes or penalties.

Another option is to offset the value of the retirement accounts against other marital assets. For example, one spouse may keep the full value of their 401(k) while the other spouse receives a larger share of the equity in the family home. This method can help maintain the balance of assets between the two parties.

It’s important to work with a divorce attorney and financial advisor who has experience in dealing with retirement accounts. These professionals can help you understand the tax implications of dividing these assets and ensure that the proper paperwork is filed to protect your interests.

Early withdrawal from these accounts may result in significant tax penalties and could jeopardize your financial security in retirement.

Pensions are typically subject to division using a Qualified Domestic Relations Order, similar to retirement accounts. However, the logistics and calculations involved in pension division can be complex.


Life Insurance Policies and Beneficiaries

One common mistake people make is failing to update their beneficiary designations after significant life events. For example, if you initially named your ex-spouse as the beneficiary during your marriage and later divorced, if you were to pass away without changing the beneficiary, your ex-spouse may still receive the proceeds.

Another important consideration when designating a beneficiary is to ensure that they have the necessary financial knowledge and responsibility to handle the life insurance proceeds. If you are considering leaving a significant amount to a minor or someone who may not be financially savvy, it may be wise to establish a trust to manage the funds until the beneficiary reaches a certain age or milestone.

It is also important to regularly review your life insurance policy along with your overall estate plan. Changes in your financial situation, family dynamics, or overall goals may necessitate adjustments to your policy or beneficiary designations. Keeping your policies and beneficiaries up to date ensures that your wishes are carried out and your loved ones are protected.


Real Estate Titles and Deeds

Real estate is often one of the most significant assets that couples need to address during a divorce.

There are various types of real estate titles, including sole ownership, joint tenancy, tenancy in common, and community property.

In sole ownership, one individual holds complete ownership rights to the property.

Joint tenancy, on the other hand, allows co-owners to hold equal shares of the property with the “right of survivorship.”

Tenancy in common allows co-owners to have different ownership shares, and each can transfer their share independently.

Community property, which is applicable in some states, considers property acquired during the marriage as jointly owned by both spouses.

In the event of death, divorce, or annulment, community-property states divide property and debts between the two spouses, regardless of who acquired them. As of August 2016, there are nine community-property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin). Also, Alaska allows spouses to opt for a community-property arrangement if desired. [1]

Understanding the type of real estate title is important for determining how the property will be divided during the divorce process.

In addition to real estate titles, divorcees must also consider real estate deeds. A deed is a legal document that transfers ownership of property from one party (the grantor) to another (the grantee).

Deeds are used during property purchases, sales, and transfers. When it comes to divorce, a deed may be required to transfer the ownership of a property from both spouses to one.

During the divorce settlement, the couple should consult with their divorce attorneys to determine how the property will be transferred and whose name will remain on the deed.

It is important to note that simply removing a name from the deed does not eliminate financial obligations associated with the property, such as mortgages or liens. These matters must be addressed separately, often as part of the divorce settlement agreement.


Credit Reports, Joint Bank Accounts, and Credit Card Debts

Firstly, it is important to obtain copies of your credit reports from all three major credit bureaus – Equifax, Experian, and TransUnion. This will give you a clear understanding of your current credit standing and help you identify any joint accounts or debts that need to be addressed. Reviewing your credit reports will also allow you to spot any errors or fraudulent activity that may impact your financial well-being.

Credit card debts are another financial aspect that needs careful attention. It is important to understand how credit card debts will be divided between you and your ex-spouse.

Start by assessing all joint credit card accounts and considering how to divide the balances. Options include paying off the debts together, transferring balances to individual accounts, or closing joint accounts and establishing new ones. Consult a divorce attorney or financial advisor to explore the best course of action based on your specific circumstances.

During the divorce process, it is critical to maintain good communication with your credit card companies. Inform them about the impending divorce and any changes in your financial situation. This will help prevent any misunderstandings and ensure that all parties involved are aware of their responsibilities.

Continue monitoring your credit report regularly after the divorce is finalized. Ensure that all joint accounts are closed or transferred and that your credit report accurately reflects the changes. This will help you safeguard your credit score and address any discrepancies promptly.



Financial Plan During Divorce

Creating a solid financial plan can help you navigate the process and ensure that you are making informed decisions for your future.

Assess your income and expenses. Understand your monthly cash flow, including income from employment, spousal support, or child support, if applicable.

Similarly, make a comprehensive list of your regular expenses, including housing, utilities, insurance, groceries, and any other financial obligations. This will help you determine your financial needs and adjust your budget accordingly.

During a divorce, be cautious with your spending. Avoid making any significant financial decisions or purchases without careful consideration.

Consider seeking the guidance of a financial advisor or planner who specializes in divorce. They can provide objective advice and help you effectively manage your finances during this challenging time. They can also assist in evaluating long-term financial goals, such as retirement planning and investment strategies.

Remember, a financial plan during a divorce is not one-size-fits-all and should be tailored to your specific needs and circumstances. By taking proactive steps and seeking professional guidance, you can protect your financial well-being and lay the foundation for a stable and secure future.


Seeking Professional Advice from a Lawyer

Working with a divorce lawyer is equally important to ensure that your legal rights are protected. A divorce lawyer can help you understand the applicable divorce laws in your jurisdiction and guide you through the divorce process.

They can provide advice on the equitable distribution of assets, including separate property and marital property, and advocate for your interests during negotiations or court proceedings.

A divorce lawyer can also assist in drafting a divorce agreement or settlement that accurately reflects your financial situation and protects your long-term financial well-being.

Both a financial planner and a divorce lawyer can work together to provide a holistic approach to managing your financial affairs during a divorce.

They can collaborate to ensure that your financial goals align with your legal rights and obligations. This partnership can help you make informed decisions about the division of assets, spousal support, child support, and other financial matters.


Going through a divorce can take a toll on more than just your emotions; it can also have a significant impact on your finances.

At Sacks & Sacks, we understand the importance of protecting your financial future during a divorce. Our team of experienced attorneys specializes in helping you navigate the complexities of dividing assets, determining spousal support, and safeguarding your financial interests.

If you’re going through a divorce, it’s crucial to have a trusted legal team by your side who can guide you through the process and ensure that your financial well-being is protected. With Sacks & Sacks, you can have peace of mind knowing that we will fight for your financial security.

Contact Sacks & Sacks today to schedule a consultation with our team of experienced divorce attorneys. We are here to help you protect your finances and secure a stable future.



[1] Do You Take This Debt, for Better or Worse? – NerdWallet. (n.d.). NerdWallet.

by Adam Sacks

Adam Sacks is lead Family Law Attorney at Law Offices of Sacks & Sacks, P.A. in Jacksonville, Florida. He has a BA in Psychology from 1994, and received his Juris Doctor Degree in 1999 from the Western Michigan University Cooley Law School.

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1646 Emerson St. Suite B Jacksonville, FL 32207

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