Collecting financial information and creating a budget will help your divorce lawyer and financial advisor do their jobs most effectively – and let you know where you stand.

Your divorce lawyer and your financial professional are going to ask you to gather information and documents for them, so you might as well start this process now. Here are some things you should consider and prepare for as you go through the divorce process. 

Early Divorce Stages

If you are in the early stages of your divorce you will need to compile information regarding all the assets and debts acquired during marriage; assets acquired before the marriage, or at any time via gift or inheritance; all sources of income for you and your spouse; and a list of your weekly, monthly, and annual living expenses, which includes everything from mortgage/rent to food, clothing, car expenses, etc. Here are some tips:

  • Make a list of your assets (see “List Your Assets”);
  • Determine whether each one is marital (community) or separate property – you may need a divorce lawyer to help you with this determination;
  • Assign values to each of those assets;
  • Determine your current and post-divorce needs;
  • Start making a budget.

The Divorce Process Budget

By creating a budget, you’ll reduce the uncertainty and guesswork about what you can and can’t afford both during and after the divorce. You need to determine what your current living expenses are and how you’ll pay for these expenses; potential sources of income during divorce include your own employment income, and spousal and/or child support (if you’ll be receiving these). In addition to your regular living expenses, you need to make a budget for professional help from a divorce lawyer, mediator, financial professional, valuator, etc. If your income from all sources won’t be enough to cover your living expenses and divorce-related costs, you need to take a hard look at your expenses and see where you can trim them. Ask your financial professional for help with this process. If you’re still coming up short, you may need to dip into savings and/or speak to your lawyer about the possibility of increasing the amount of support you’ll receive during the divorce process. If your spouse can’t afford to pay more support, the two of you will have to consider liquidating and dividing some marital property so you can both pay your bills.

(See Pre-Divorce section on Expense Worksheet)

The Post-Divorce Budget

Once you have finalized your divorce agreement – including property division and spousal and/or child support, if applicable – you’ll be equipped to create a realistic post-divorce budget for your living expenses. Use the pre-divorce budget you created as a starting point, since your post-divorce budget will include almost all of the same items (with the exception of divorce-related bills, once you have finished paying your professional team).

(See Post-Divorce section on Living Expenses Chart) 

For more information about financial issues and divorce, please go to http://www.divorcemag.com/financial-issues.