As you take steps to separate your finances, you should document all of your assets and liabilities at the time of separation. Here are the steps you should consider to start managing your finances early in the divorce process.

You need to start to minimize the financial ties between you and your spouse during the divorce process. A joint account mean that you’ll continue to be attached to your spouse’s spending habits and debts – not only during the divorce process, but even after the divorce is finalized.

It may not be possible to close all of them before your divorce is finalized, but you need to be aware that joint bank accounts, loans, security on loans, credit cards, and mortgages could create financial problems for you – in spite of what your eventual divorce agreement states. In many cases, you could be legally and financially responsible – not only for your own share of these liabilities, but also for your ex-spouse’s share. For instance, if your divorce agreement states that your spouse will be responsible for joint credit-card debt post-divorce, but he/she fails to make payments, the credit-card company will come after you for payment. Your credit rating will also be at risk should there be any missed or late payments on any outstanding joint debt.

As you take steps to separate your finances, you should document all of your assets and liabilities at the time of separation. Below are some suggestions regarding the initial steps you should consider to begin managing your finances early in the divorce process. Since all divorces are unique, not all of these steps will apply to your situation. Speak to your lawyer and your financial professional first to create a custom strategy for separating your finances and decreasing your liability for joint debt.

  1. Go through your own bank accounts as well as every joint account you and your spouse may have. Make a copy of the statements for your records.
  1. Identify, list, and do your best to value all of the assets and investments that you and your spouse own. Use the “Asset Worksheet” to help you with this task. For some items – such as valuing a business, pension, stock options, etc. – you’ll need expert assistance from a financial professional who specializes in this kind of work (see “About Financial Professionals” for more information).
  1. List any debts you and your spouse need to repay such as credit cards, loans, and mortgage(s). Include details about who is making the payments and from which bank account the payments are made.
  1. Make note of your current family budget in relation to your family’s gross income. You need to know the amount of monthly and annual income, the amount of monthly and annual expenses, and the sources of both the income and the expenses.
  1. Because you will require access to funds during your divorce proceedings, consider moving some money from the joint account to a separate account. Take up to 50% – but do not clean out the account! Be sure to document any financial changes you make and share that information with your lawyer and financial professional.
  1. Look into hiring a financial professional who specializes in divorce finances and related issues, such as a Certified Divorce Financial Analyst®, in order to discuss your pre- and post-divorce finances.
  1. Consider ways that you can start to build or improve your current credit history. If you don’t already have your own credit card, apply for one immediately; charging manageable amounts each month, and paying the bills on time is a good way to start establishing your credit score. If you plan to purchase a new home or to rent an apartment after your divorce, you’ll need good credit history to show that you’re a safe risk for the mortgage lender or landlord.
  1. If your spouse is spendthrift, and you’re the primary or sole wage-earner, it’s important to talk to the bank ASAP about requiring dual signatures for withdrawals or transfers above a certain dollar amount. If you have joint credit-cards with high monthly limits, consider decreasing the amount. After taking that step, let your spouse know that he/she needs to apply for a card in his/her own name immediately since you’ll be cancelling the joint card within a set period of time.
  1. If your spouse was the primary wage-earner in your marriage, think about upgrading your current skill set to improve your earning ability. If you hope to maintain your current lifestyle post-divorce, you’ll probably need to increase your income. If you intend to start working towards a degree, try to enroll in classes as soon as possible. Ask your lawyer about a spousal support amount that will cover your living expenses and tuition while you’re in school.

For more information about finances during divorce, please go to www.divorcemag.com/financial-issues.