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How to Prepare for Financial Independence Before Divorce

Credit Cards

It is important to prepare for financial independence well before you actually file for divorce or separation to avoid costly pitfalls down the road. Having served hundreds of families since our Family Divorce Consumer Advocacy was formed in 2010, we have watched many suffer the costly pitfalls of not taking a few simple steps BEFORE separating or filing for divorce.

If you have been financially dependent on your spouse for a large portion of your marriage it is possible that you may not have an independent credit history. Those that don’t have an established credit history may be required to shell out hundreds of dollars in deposits when establishing things such as new utility accounts and renting an apartment for temporary housing post divorce. If your name wasn’t on your family home mortgage it actually may not be possible to transfer it to you should you desire to assume the payments and stay in the home. There are several things you can do to overcome this.

  • Add your name on all family utility accounts
  • Apply for 1-2 credit cards in your name only using your family’s annual income and seek the highest credit limit possible. This may come in handy if you are temporarily cut off from family funds and you need to provide for yourself. Use them just a little each month, put a $25-$50 charge per month on them and pay them off completely each month
  • Seek employment, full or part-time work if you are not already employed. Judges do not view favorably an unemployed spouse who initiates divorce without a clear plan in terms of providing for themselves

4-Establish your own banking savings and checking accounts

5-Try to resolve as much debt on joint account credit cards as you can

Also during temporary separation but BEFORE your divorce settlement is finalized make sure to add your name to ALL family investment accounts that will be separated. If your name is only added to the account AFTER the settlement and you decide you need to sell some of those investments within 12 months after your name was added you could incur an unexpected hefty short term capital gains tax (28%-35%). More financial tips in the Transitions Divorce Prep Workbook

Do you have a personal story that you can share regarding these issues? I would love to hear from you.

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Disclosure of Material Connection: I have not received any compensation for writing this post. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR. Part 255: “Guides Concerning the Use of endorsements and Testimonials in Advertising.”

Disclaimer: This is my personal blog. The opinions I express here do not necessarily represent those of my organization, Transitions Resource, LLC. The information I provide is on an as-is basis. I make no representations as to accuracy, completeness, suitability, or validity of any information on this blog and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its use.

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