7 Ways to Ready Your Finances for Divorce: Avoid Costly Money Mistakes in Texas

Divorce is a challenging time emotionally and financially. However, proactive preparation can help you navigate the complexities and emerge financially secure.

At C.E. Borman & Associates, a compassionate yet strong divorce firm in Bryan, Texas, we understand the importance of financial readiness.

Here are seven practical ways to get your finances in order before, during, and after divorce.

1. Gather and Organize Your Financial Records

Start by creating a comprehensive snapshot of your financial situation. Collect:

Bank statements: All checking, savings, money market, and investment accounts (both joint and individual)
Tax returns: Copies from the last three years
Debt information: Statements for credit cards, loans, mortgages, etc.
Income documentation: Pay stubs, 1099s, Social Security statements, etc.
Real estate documents: Deeds, mortgage statements, property tax records

Knowing your assets, debts, and income streams is the foundation for making informed decisions and ensuring fair settlements.

2. Create a Detailed Budget (and Reassess it Regularly)

A budget serves as your financial roadmap. Track:

Monthly expenses: Rent/mortgage, utilities, groceries, transportation, childcare, debt payments, etc.
Spending habits: Identify areas where you can cut back
Post-divorce life: Consider changes like separate housing, individual insurance, and other expenses

A realistic budget will help you understand your financial needs, negotiate spousal/child support, and plan for the future.

3. Open Your Own Bank Account (and Safeguard Your Credit)

Financial independence is key during divorce. Open a personal bank account in your name only and:

Redirect income: Have your paycheck and any other income deposited directly into your new account
Gradually close joint accounts: Or remove your name from them to avoid disputes and protect your assets

Additionally, obtain a free credit report from each of the three major credit bureaus. Monitor your credit regularly to catch errors and stay informed about any changes.

4. Know Your Assets and Debts

Divorce involves dividing both assets and debts.

Marital property: This is typically anything acquired during the marriage and is subject to division
Separate property: This is usually what you owned before the marriage or received as a gift/inheritance, and it's generally not divisible

Understanding the difference and identifying all assets (from real estate and vehicles to retirement accounts and personal belongings) is crucial. If needed, get appraisals for high-value items to ensure an equitable division.

5. Understand the Tax Implications of Divorce

Divorce can significantly impact your taxes. Consider:

Filing status: Will you file as single, head of household, etc.?
Deductions and credits: Who can claim them (mortgage interest, child tax credit, etc.)?
Property division: Are there tax consequences for selling the marital home or transferring assets?

Consulting with a tax professional can help you make informed decisions and avoid unexpected tax burdens.

6. Seek Legal Guidance from an Experienced Texas Divorce Lawyer

Divorce laws in Texas can be complex. An experienced divorce attorney will:

Explain your legal rights and options
Advocate for your interests in negotiations and court proceedings
Protect your assets and help you achieve a fair settlement
Handle paperwork, court appearances, and other legal matters

Having a skilled advocate on your side can make a substantial difference in the outcome of your divorce.

7. Focus on Your Long-Term Financial Well-Being

Divorce is a chance for a fresh start.

Set financial goals: What do you want your life to look like?
Create a financial plan: How will you save for retirement, manage debt, and invest for the future?
Consider career development: Can you enhance your earning potential?

Investing in yourself and your financial future is a powerful step towards a brighter, more secure tomorrow.

C.E. Borman & Associates: Your Trusted Partners in Bryan, Texas

At C.E. Borman & Associates, we're committed to guiding you through the legal and emotional complexities of divorce. Our compassionate team understands the challenges you face and will provide the support and expertise you need. Contact us today for a confidential consultation.

About C.E. Borman & Associates: At C.E. Borman, our family law have years of experience guiding our clients through all facets of family law. Our team is dedicated to facilitating life’s changes for people, and we are honored to guide them through the legal process on their way to a better, happier, healthier life.