Linda E. Wasielewski, P.L.C.

PRE-DIVORCE PLANNING

Contrary to media portrayals, few people file for divorce on the spur of the moment.  It is usually a long process of evaluation, hope, disappointment and finally a decision is made that the marriage must come to an end.

As an individual gets closer to making the decision to seek a divorce, he or she can take some initial steps to get ready - financially and legally.

Evaluate your finances

• Find out what you own and how much it is worth

• How much is your home worth?

• How much are your property taxes?

• What is the outstanding mortgage on your home?

• What is the monthly mortgage payment?

• How much are your utility payments?

• How much are you paying for medical and dental insurance? and what does it cover?

• How much debt do you have? Whose name is it in?

• What other assets do you have? Bank accounts?  Stocks? Bonds? Mutual Funds?

• Do either of you have pensions, IRA's, etc?  How much are they worth

Know that this is your business.  While in many marriages, one person takes the lead in bill paying and investments, both parties have a right to know and a duty to know where they are financially.

Start making copies of statements as they come into the home and keep them in a file.  Make copies of financial statements, tax returns, retirement plan documents, brokerage statements, insurance policies, deeds, bank account records, property tax statements, etc.  Keep these copies in a safe place, not at the marital home.

Make copies of any and all insurance policies relating to the marital residence, furnishings or other assets, including any riders for jewelry, silverware or other valuables. If you pursue a divorce, this information will be needed.  It is far less costly to have the information available than to have to seek it through the discovery process.

Go through your house, room by room, and make a list of all of the items in each room and think of a value for each item.  If possible, take digital photos of each room so you don't forget any items. Make a spreadsheet of this list and include whether or not each item is something you wish to keep.

You may want to consider getting a post office box for your own mail. If you do not have a safe place outside the marital home to keep copies of important documents, you may want to get a safe deposit box at a bank.

If things are being hidden, be a detective and find out what they are and what their value is.  Keep copies and records.

Make out a budget

In order to evaluate what your life will look like after you separate it is important to make a realistic budget that takes into account your earning potential and the living costs that you will sustain.

• What will housing ? If you don't know, start looking at apartments and homes - learn the monthly cost of your options.

• What will utilities run?  Evaluate whether you actually need all the cable tv channels that you currently pay for; the unlimited telephone and cell phone coverage.

• What will food cost per week/month?  If you are not the one who does the shopping, get educated on the cost of food and supplies.

• If you don't work, how much will you make WHEN you go back to work (no you can't sit home unless you are over retirement age)

• Do you have reliable transportation?  What is the monthly cost of the vehicle?  Can you afford to continue driving that automobile?  If the car is old, is it in need of constant repairs?  If so, will you have the money and time to continue to fix it up.

• What is the cost of insurance?  Home? Auto? Medical? Dental?

• If you have kids - will there be child support?  If yes, remember that your costs will also be high.  You may need child care in order to work.  There will be transportation costs that you did not previously have.

• Be realistic - your standard of living won't be the same unless you were really wealthy to begin with.

Can you really afford to keep the house?

• This is a highly emotional issue.  This may be the house where the kids grew up.  You may have lived there for 20 years.   This may be your security blanket - where you really feel safe.

• You must balance the emotion with reality.  You might not be able to afford the home and all of its costs.  There may not be sufficient cash flow to keep this asset. Remember that as a couple you may have been able to afford this house; but now each of you will have to afford a home.

• Someone will have to refinance in order for one to keep the house.  While you can transfer title to the home from one spouse to another, this does not bind the mortgage company.  It lent the money based upon both of your salaries and both of your signatures.  It is unlikely that a bank or mortgage company will simply take one party off of the mortgage.  Therefore, will you qualify to refinance?

• Even if you qualify for refinancing the home, is it really in your best interest to do so?  Do you really want the house if every penny is used to keep it?  Are you willing to sacrifice vacations, entertainment, clothes purchases to keep the home?  Are you willing to give up other assets such as retirement benefits in order to keep the home as an asset?

• Is there any equity in the house? Have you refinanced repeatedly taking more and more equity out to pay bills? Has the fair market value of the home dropped below the mortgage balance?

• If one party keeping the home is not a realistic option, how long would it take to sell it? Will it sell?

Prepare yourself and your children emotionally.

• Investigate the community resources available to you and your children for counseling, financial assistance and divorce workshops, etc.

• Hire a good therapist or join a support group.  You are losing your best friend, the person who, in the past, you to talked to about everything.  You will need someone understanding to talk with about what is going on in your life.

• Consider medication.  Most people going through a divorce are clinically depressed.  Discuss with your therapist or family doctor about what medications are available to help you through this difficult time.

• Read all about it.  There are some very good books on divorce available from your public library or at the local bookstore.

Protect your credit

Build up your own credit.  If you do not have credit cards in your own name, you should immediately obtain credit cards in your own name so that you can establish credit. It may be easier for you to establish this credit while you are still married.  Without a credit history, you may find it difficult after the divorce to purchase a house or even a car.

When you are ready to separate, close all joint credit card accounts. Do not create any additional indebtedness and do not allow your spouse to do so either.  Do not make major purchases or allow your spouse to make major purchases just prior to filing for divorce or during the divorce proceedings without consulting first with a lawyer.  Do not refinance the marital home just prior to filing for divorce.  Discuss this matter with your attorney to determine what is best to do in your situation.

Be prepared

If you have any special things that belong to you, consider moving those items out of the house.  Keep a record of those items, as you will be required to account for them during the divorce proceeding.

If you believe that your spouse may intend to remove some items from the home, take pictures of those items, or even consider video taping all items in the house, room by room.  (Remember do not keep the pictures or video tapes at the marital home.)

If you have any incriminating information about your spouse like a video tape, a police report, a diary, or copies of emails to his/her lover, keep these items in a safe place, not at the marital home.

If possible, set aside cash reserves to use during the first few months of separation. Consider transferring your half of the joint funds to your separate bank account.  Do not spend it recklessly as the Court will require you to account for it.

Keep all inheritances separate form your spouse. If an inheritance is received, don't put it in both you and your spouses’ name and don’t use it toward marital purchases or marital expenses.

Be realistic in your expectations

• In a divorce each party will get approximately half – of the debt, of the assets, of the retirement

• It is unlikely that you can continue to live the same lifestyle in the same neighborhood as you did prior to the divorce.