Couples undergoing divorce in North Carolina will face numerous financial issues after their marriage is over. Planning before the separation or divorce can help soften the financial landing.
Once separation or divorce appears likely, a spouse should compile information on income and household expenses. This helps with planning a post-divorce budget and is also important for presenting evidence in court on alimony, child support and dividing assets and debt.
A spouse should track and keep records on household expenses such as food, clothing, utilities, insurance, transportation and child care. Bank and credit card statements may be reviewed to determine earlier spending and for predicting future expenses. Financial planning should also incorporate paying for one-time expenses such as home and appliance repairs, vehicle repairs and expenses, vacations, and gifts for holidays and birthdays. Circumstances may also change in the future, such as a spouse having to obtain their own health insurance coverage after divorce when they are no longer eligible to be on the other spouse’s plan, which will significantly increase that spouse’s monthly expenses.
Gathering significant financial documents is also important. These include statements for checking and savings accounts, credit cards and retirement and investment accounts. A spouse should also obtain recent pay stubs, income tax returns for the last three to five years and statements for mortgage, auto loans and personal loans from the past year. For debt and property division, information should include lists of assets and debts brought into the marriage and accumulated during marriage.
Gathering this paperwork in advance can help prevent confrontation and trips to the court house to compel production of documents. Financial institutions and advisors do not have to keep documents and requests for information confidential where the spouses share accounts. Both spouses should try to obtain documents that are within their possession and control, rather than relying solely on the other spouse to provide everything.
It is also advisable to remember financial planning that needs to take place after the divorce is final. This includes changing beneficiaries on life insurance policies and retirement accounts and updatingwills and health care power of attorneys to be consistent with your wishes as an unmarried person so long as these changes are not in violation of your agreement or court order.
Spouses should keep all financial matters transparent. All efforts should be made to maintain the status quo with respect to financial accounts and payment of bills while the spouses are trying to work out an agreement, however, when parties separate prior to an agreement being in place this may prove challenging. Dividing households means two separate sets of expenses where for many expense categories there used to be only one expense, and this generally means both spouses are going to have to compromise in trying to reach an agreement when financial support is an issue.
An attorney can assist a spouse with making financial decisions which comply with North Carolina law and provide options. A lawyer may also help ensure that a decree is fair and reasonable.
Source: The Dallas Morning News, “If divorce is in your future, ready your finances with these 7 actions,” By Elizabeth Renter, NerdWallet, June 22, 2017