So, you put your resolve to divorce in a box (yet again) and slogged through another difficult holiday season, the voice in your head saying, “Where do I even start?” It’s a new year. How about a fresh start all the way around?
Let’s unbox your resolve and pair it with some direction from The Divorce Hacker’s Guide to Untying the Knot: What Every Woman Needs to Know about Finances, Child Custody, Lawyers, and Planning Ahead. Here family law attorney Ann Grant presents the practical information every woman needs to protect herself as she navigates through a divorce. Readers learn how to take back their power and rights concerning finances, home, children, and work life. With compassion, insight, and tough-minded realism, Grant breaks down the divorce process and provides step-by-step assessments and checklists, as well as inspiring stories of successful lives post-divorce.
We hope the following excerpt from The Divorce Hacker’s Guide to Untying the Knot will be helpful to you or someone in your life who is starting the divorce process. Please share it with anyone who might need it.
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As soon as you learn that your marriage is in trouble, take some key steps to protect yourself. While you may be hoping that things will work out, there is simply no substitute for being prepared in the event that they don’t. Do not be lulled into complacency if you are working with a marriage counselor or clergy in an effort to save your marriage; don’t expect that things will somehow magically get better if you wait long enough for your husband to “come around.” While it’s fine to hope for the best, you need to prepare for the worst.
In the legal system, knowledge is power and money is key. Set aside money and gather information now, before you or your husband file for divorce, so that you are in the driver’s seat when it happens. Once the divorce is filed, everyone retreats to their separate corners, and it becomes much more difficult and costly to obtain the information and the money you need. The odds are high that, if your husband is anticipating divorce, he is already taking action to prevent you from accessing your money. I see this happen in virtually every divorce case I handle.
I had a client, Cecilia, who is a perfect case in point. Cecilia fell in love with Jeff, a handsome professional athlete, and they married when she was young. She became pregnant shortly after they married, and since Jeff traveled frequently with his team, she stayed home with first one baby, then two. When Jeff’s career as a player ended, he became a coach for a professional sports team in Los Angeles. He made good money, and their family had a great life. Cecilia didn’t have to work and devoted herself to raising the kids and enjoying the perks of being a coach’s wife.
But then came the signs and the alarm bells — which Cecilia chose to ignore. Even after Jeff left the home and was openly having an affair with another woman, Cecilia believed that everything would be fine and that Jeff would “do the right thing.” She remained in denial, hoping that Jeff would return to the family. Despite all the signs that her marriage was ending, Cecilia did nothing to prepare for the inevitable, until it all came to a screeching halt. One day, Cecilia and the kids arrived home from dinner while Jeff was traveling with the team. When they pulled into the garage, they found it empty. Their teenage son’s Jeep was gone. They frantically called the police. Only after the police located Jeff, driving the Jeep, did the family realize what had happened: Jeff had returned early from the trip, loaded the Jeep with his belongings, cleaned out the joint checking account, and taken off. When Cecilia arrived at my office, she had $238 in her bank account. Jeff had taken over $300,000 from the joint account and transferred it to a separate account of his own — so she couldn’t hire a lawyer.
In my work, Cecilia’s story is not an isolated incident. Inevitably, as I unwind each woman’s story, I find that financial infidelity often accompanies sexual infidelity. And virtually every woman is stunned to discover this. Don’t let this happen to you. Take the following steps now to protect yourself and your children, and do not be naive. Your husband may have pledged to look out for your best interests financially and otherwise during your marriage, but when your marriage is in trouble, it is up to you to arm yourself with money and information so that you have an edge. These are the first steps to take control of your future.
Get Money Wise
You will need funds to retain a lawyer and support yourself for several months until you can either negotiate support or obtain a court order. Take these steps to set aside the financial resources you need.
Open a bank account in your name
Open this account at a different bank than the one where you and your husband share a joint account.
Set aside money for living expenses and to hire an attorney
Did you know that you can take half the money out of your joint account and put it in a separate account in your own name if you live in one of the nine community-property states like California? You may not want to take out half the money all at once because it will alert your spouse to your intentions, and it may cause checks to bounce. At first, take out smaller amounts and put them in your new account, so that when the time comes, you can hire an attorney and cover your living costs for several months.
Secure your assets
During a divorce, I’ve seen valuable wine collections disappear, coin collections go missing, and money evaporate. Do not be surprised when your husband tells the judge that he has no idea what happened to the silver coins your grandfather left you — and the judge shrugs and moves on. Take steps now to protect what is yours; remove or hide valuable items. It is much easier to return items you have removed in order to protect them than it is to locate items someone else has spirited away.
Check your credit score
You need to build your own credit. Few numbers in life matter as much to your financial outlook and well-being as your credit score (known as the FICO score). A good credit score is crucial for financial success. It is one factor used by lenders to determine your creditworthiness for a mortgage, loan, or credit card. Your score can affect whether you are approved for credit and the interest rate you are charged. Prospective employers often check your credit score when you interview for a job. It is important to know what your credit score is and to improve it if it’s not in the “good” range.
The three major credit-reporting agencies are Equifax, Experian, and TransUnion. You need to check your score with each agency because your score may differ between them. This is because some lenders report to all three credit agencies, but others do not. Since your credit report can contain errors that adversely affect your score, you need to check all three to make certain that they are accurately reporting. Further, in 2017, Equifax suffered a major data breach, so if you have a credit report with them, check out the Federal Trade Commission’s website for what to do.
You can easily access your score online for free and track your credit-building progress on sites such as CreditKarma.com or AnnualCreditReport.com. A “good” credit score is generally considered to be 720 or higher. Lenders, however, have different standards for what they consider to be a good credit score, and so it is important to keep building your score to receive the most favorable interest rates and the highest rates of credit approval. Later, I’ll provide concrete tips for building your credit. For now, simply take the first step to find out what your credit score is.
Open two credit cards in your own name
You need to be the primary cardholder on at least two credit cards, if possible. You can have a wallet full of credit cards, but if your husband is the primary cardholder and you are the secondary, he can cancel those cards without your permission. So get at least two cards in your name now, while you can use your combined credit score to get approved. Once you are divorced, it may be harder to get credit in your own name if you don’t have substantial income of your own.
Copy Financial Documents
When you meet with your attorney, he or she will ask for your financial documents. Save yourself time and money by collecting these documents now.
Gather and copy all financial documents, even those in your spouse’s name
Copy anything with a dollar sign attached to it, such as bank accounts, investments, and retirement plans. Many women tell me their husband insists he is going to keep “his” 401K or pension. Wrong. If you live in a community-property state, half of any pension or retirement fund earned by your husband during the marriage is yours. If you live in an equitable property state, you are entitled to your fair share of his 401K or pension. Here is a checklist of documents your lawyer will want when you meet:
- Employment information: Paycheck stubs for you and your spouse for the last twelve months (or at least the last three months to the current date).
- Tax returns: Include the last three years of state and federal income tax returns.
- Pension and retirement programs: Copies of 401Ks, investment programs, stock, stock options, and bonds provided through the employer for you and/or your spouse.
- Insurance: Documents regarding insurance provided through the employer for you and/or your spouse.
- Real property: Deeds showing the legal description of any real property owned individually or jointly with your spouse, escrow papers from the time of purchase, current mortgage statements, current real property tax statements, homeowners or fire insurance policies on all real properties, and tax assessor’s statements.
- Stock portfolio: List of corporate stocks and/or stock certificates owned by you and your spouse, individually or jointly, and the name and address of stock broker(s).
- Cars, boats, trailers: Copies of pink and registration slips, encumbrance (what’s owed), and monthly payments.
- Life insurance: Current policies with statements of any loans against them.
- Promissory notes and/or deeds of trust: Copies of such records that name you and your spouse as beneficiaries.
- Credit cards and loans: Credit cards; creditor’s statements showing names, address, account numbers, and balances presently owed, plus creditor’s statements showing balances owed at separation date; financial statements of net worth prepared by you or your spouse to secure bank loans or for any other purpose; and any other information that will help establish your net worth individually or jointly, for you and your spouse.
- Household furniture and furnishings: Take pictures of significant items with your opinion of the estimated value. You may be asked to list those items that you wish to keep and those that you wish to give to your spouse.
- Bank or credit union accounts: Most recent statements showing balances, particularly at date of separation, held in individual or joint names, savings passbooks, and certificates of deposit.
- Wills or trusts
- Written agreements: Premarital written agreements with spouse.
If your spouse owns a business, copy financial information about the business
You must prove your husband’s income to obtain support, and it is more difficult to establish cash flow for a spouse who is self-employed than one who receives a W-2. If your spouse is self-employed, he will probably understate his earnings and overstate his business expenses to decrease what he owes in spousal and child support. Before the divorce is filed, obtain whatever information you can about the business and its finances. Your lawyer will want the following:
- Corporate or partnership federal and state income tax returns for the past three years.
- Copies of recent financial statements prepared to apply for credit or business loans of any kind.
Document your monthly budget for household expenses
Gather information on all household expenses, for you and your children, including mortgage/rent, property taxes, homeowner’s fees, car payment, insurance (home, car, medical, and life), utilities, personal expenditures, travel, education expenses, health care, and so on — everything, in other words, that you spend to maintain your standard of living on a monthly basis. This information will determine the amount of child and spousal support you will receive or pay. I recommend that for expenses that fluctuate (like the water and gas bill), you gather expenditures over the past twelve months and divide each category by twelve. It is important to include everything, since once support is ordered, getting it modified is costly and time-consuming, and can only be accomplished in certain circumstances. For example, if you do not include the expense for the children’s summer camps in your calculation before the divorce is final, you may have difficulty getting your ex-husband to share that expense after the divorce.
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Ann E. Grant, JD, began her career as a corporate litigator specializing in unfair business practices and consumer fraud. After her divorce she created her own firm, focusing on family law and a holistic approach to this life transition. She lives and practices in Manhattan Beach, CA. Find out more about her work at www.thedivorcehacker.com.
Excerpted from the book The Divorce Hacker’s Guide to Untying the Knot. Copyright © 2018 by Ann E. Grant, JD.