In a financial sense, divorce can be a very messy affair. Splitting your finances from your former partner can be very complex. What are the things that you need to focus on to make sure that you are separating them effectively?
The Home
If you and your ex-partner own a property, banks won’t allow you to remove one spouse from the mortgage, even in divorce. If you want to get the house in your name, you need to refinance it. Of course, you can always look to sell it if it makes life easier. So many people look to sell home for cash purposes which can make the process a lot quicker and easier. If one of you wanted to keep the home, you could leave both names on the house but this requires a co-ownership agreement as part of the terms of the divorce. This is only a good idea if you are on good terms with your former partner.
Credit Cards or Loans
The fact is that if you have a few credit cards between you, it’s important to obtain a copy of your credit report to identify all of the credit cards and loans attached to both of you. It’s important to have an independent credit history and now would be the perfect time to apply for a credit card in your name if you don’t have one. If you have joint credit or loans, you can do one of three things: you can either do nothing, pay them off now, or pay them off later. While the most efficient process is to settle the balance immediately and close the accounts, which reduces any risks to your credit score, if you agree to close the account, credit card companies can often be allowed to close the account to avoid any additional purchases.
Bank Accounts
If you have a joint bank account with your ex-partner, this is one of the bigger priorities. When you create a comprehensive list of all the accounts you have, you can establish a record of every bank account and proceed on dividing them. If you are on friendly terms with your spouse you can close the account together. As awkward as this may be, it is one of the quickest ways to dissolve any shared accounts. But in the meantime, if you cannot settle the accounts until you reach your divorce settlement, you should open one in your name already so you can establish your own financial identity.
Investments and Retirement Accounts
This is not as straightforward as canceling credit cards or bank accounts. You need to know the exact details of each investment and retirement account before you divide the funds. Sometimes, liquidation is the best approach because the withdrawal or transfer fees can be very costly. For example, if you are running a business and your partner is involved, this may require additional legal help. When you divide retirement assets, it depends on the type of account and the rules that must be followed with that account.
It’s not an easy thing to divide assets in divorce but one of the most important aspects of doing this is to establish your own financial identity. It’s not an easy thing, but you can get through it.