Divorce is challenging – emotionally, legally, and financially. But one of the best ways to reduce the overwhelm is to get organized and strategic, especially when it comes to your finances.
Mid-year is an ideal time to take a step back, evaluate your financial situation, and make necessary adjustments before the tax year gets away from you. Whether you’re contemplating a divorce or already in the middle of one, this financial planning checklist can help you take stock of your financial life and lay a solid foundation for your next chapter.
Why Mid-Year?
Mid-year isn’t just a place on the calendar. It also offers practical opportunities. By this time, you’ve likely paid last year’s taxes, and your income and expenses for the first half of the year are much clearer for consideration. This gives you a unique advantage of hindsight and time until the end of the year, allowing you to evaluate what’s working, what’s not working, and what may need immediate attention.
For someone navigating a divorce, this point in the year can be a valuable checkpoint. There’s still enough time to gather information, make thoughtful decisions, and adjust financial plans without the pressure of year-end deadlines or the added stress of the holiday season.
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Your Mid-Year Divorce Financial Checklist
A mid-year financial checklist isn’t just a series of “to-dos.” These are tools that can offer you financial control and peace of mind.
1. Create or Update Your Budget
The way you budget during your marriage is very different from how you’ll budget as a single person. This is an opportunity to create a realistic financial picture of your life going forward.
Start by estimating your anticipated living expenses – your rent or mortgage payments, utilities, groceries, transportation, and any costs related to your children. If you’re already separated, track your personal spending closely. Don’t rely on shared household numbers. You’ll also want to factor in potential child or spousal support, costs related to moving, childcare arrangements, counseling, and legal fees.
By creating a detailed budget now, you’ll be better prepared for settlement negotiations and future financial independence.
2. Gather Your Financial Documents
Organized documentation is one of the most essential parts of a financially sound divorce transaction. Courts and attorneys rely heavily on accurate financial disclosures, and the more organized you are, the smoother the process will be.
Make it your goal this month to gather and make copies of
- The last three years of your tax returns
- Bank and credit card statements
- Pay subs and W-2s
- Mortgage documents or lease agreements
- Retirement accounts or investment summaries
- Business records if you or your spouse owns a business
Organizing this paperwork now can save you significant time and money in the months ahead, as well as reduce stress as deadlines approach.
3. Review Your Credit and Debt
Divorce requires untangling marital finances, and credit can be a key part of that equation. Start by pulling your credit report from all three major bureaus (Experian, Equifax, and TransUnion). Review each line for accuracy and take note of accounts you hold jointly with your spouse.
This is the time to begin separating your financial life. If possible, stop using joint credit cards and open new accounts in your name only. Begin establishing or rebuilding your individual credit profile, which will be critical for things like renting a new apartment, applying for a loan, or even qualifying for utilities. You will also want to avoid taking on new debt unless absolutely necessary. Maintaining a clean and stable financial profile will be crucial during your divorce proceedings.
4. Take an Inventory of Your Assets and Property
Understanding what you own and what it’s worth is a core part of divorce financial planning. Begin by making a detailed list of all your marital property, including
- Real estate
- Vehicles
- Bank accounts
- Retirement plans and pensions
- Stocks, bonds, and investments
- Household furnishings
- Jewelry, art, or collectibles
- Business interests
- Any digital assets or intellectual property
You may also want to get real property or valuables appraised, so you understand their true value. It will also be important to determine what assets may be considered separate property, or those acquired before your marriage or received as gifts or an inheritance to one of you alone. An accurate inventory will help your attorney advocate for a fair division of property and ensure you aren’t caught off-guard during negotiations.
5. Track Your Spending Patterns
While commonly overlooked, tracking your spending habits can be very revealing. Monitoring both your and your spouse’s spending can provide some critical insight during your divorce, especially if you feel money has been mismanaged or hidden.
Start keeping a daily log of where your money is going. Pay attention to recurring expenses, one-time purchases, and anything out of the ordinary. At the same time, keep an eye on joint account activity. Large withdrawals, hidden purchases, or unusual transfers could be red flags, and should be brought to your attorney’s attention.
6. Update Your Estate Plan and Beneficiaries
While your focus will be on life after divorce, many people often forget to update the very documents that protect it. If your estate plan still names your ex-spouse as your power of attorney, health care agent, or a beneficiary of any accounts, it’s time to make those changes now.
You will want to review your
- Life insurance policies
- 401(k) and IRA accounts
- Will and trust documents
- Powers of attorney, both financial and medical
An estate planning attorney can help you make changes that are legally accurate and sound during your divorce and ensure your wishes are protected both during and after your divorce.
Mistakes You Will Want to Avoid
Even the most organized and financially savvy individuals can make critical errors when navigating the emotional turmoil of a divorce. While it’s natural to want to protect yourself during the process, some missteps can have legal and long-term financial consequences.
Hiding Assets or Moving Money Without Legal Guidance
With the financial uncertainty of divorce, it can be tempting to take matters into your own hands, especially if you’re concerned that your spouse may be trying to claim more than their fair share. But attempting to conceal assets, reroute income, or transfer money to friends or family is a big red flag to the courts.
Not only can these actions damage your credibility with the court, but they can also lead to sanctions, unfavorable judgments, or even accusations of fraud. During a divorce, transparency is critical. If you believe your spouse is hiding money, let your legal team handle the investigation through proper discovery tools. Acting on your own could do you more harm than good.
Leaving Joint Accounts Open Unnecessarily
Joint checking accounts and shared credit cards often continue to operate out of convenience or habit, but they also leave the door open for potential problems. One spouse could rack up debt, withdraw large sums of money, or make purchases without the other’s knowledge or consent.
Unless there’s a compelling legal reason to keep joint accounts active, you will want to begin the process of closing or separating these accounts as early as possible. If you must maintain a joint account temporarily for child support or bill payments, for example, you will want to closely monitor all activity and set clear written agreements on how the account will be used.
Forgetting About Tax Consequences
Divorce is a financial reorganization that can have many tax implications. Yet, tax consequences are commonly overlooked during the divorce process.
Consider whether you will be filing jointly or separately this year. Who is claiming the children as dependents? Are you dividing retirement accounts or assets that could trigger a capital gains tax? Have you considered potential changes in the taxability and deductibility of spousal support when provisions of the Tax Cuts and Jobs Act (TCJA) expire this year?
Failing to plan for taxes can lead to costly surprises come April. A financial advisor or tax professional can help you forecast these issues before you sign any agreements, saving you both money and stress in the long run.
Letting Emotions Drive Your Financial Decisions
Divorce is a highly emotional time, and it’s easy to confuse sentimental value with good financial decision-making, especially when it comes to high-stakes assets like your marital home. Many individuals fight to keep the family home, only later regretting it because of the expense and upkeep costs on a single income. Similarly, disputes over investments, vehicles, furniture, and personal property can become messy battles that cost more in legal fees to litigate than the items are worth.
Emotional decision-making often leads to regretful decisions. Instead, work with your legal and financial team to look at your assets in terms of practicality, long-term value, and how well they will fit into your post-divorce life. You’re not just dividing property but building a financial future for yourself. Keep the bigger picture in mind.
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When to Involve Professionals
While it may be tempting to try to handle things on your own, especially if you’re trying to avoid conflict or save money, moving through a divorce without professional guidance – both legal and financial – can lead to costly mistakes and missed opportunities.
The truth is, the right team can make a significant difference in how smoothly your divorce proceeds and how well-prepared you are for life afterward. Knowing when and who to involve is an important first step.
Your Family Law Attorney
An experienced family law attorney is a legal advocate, strategist, and shield. Your attorney ensures your rights are protected, and your case moves forward according to your state’s laws. A good divorce attorney will:
- Understand what you are legally entitled to
- Attempt to negotiate a fair settlement in your best interests
- Prepare you for custody or support hearings
- Ensure your agreements are legally enforceable
- Anticipate complications before they arise
- Represent you in court should your case go to trial
Even if your divorce seems friendly now, things can change. Having a strong legal partner from the beginning ensures you are never left unprepared.
Bringing in a Certified Divorce Financial Analyst (CDFA)
A Certified Divorce Financial Analyst specializes in the financial complexities of the divorce process. Your CDFA will look beyond the immediate numbers and help you understand how the decisions you make today will affect your financial health five, ten, or even twenty years down the road.
Your financial analyst can:
- Analyze proposed settlement scenarios
- Project long-term financial outcomes, for example, retirement viability
- Identify hidden or undervalued assets
- Help you decide whether you should keep or sell the family home
- Support your attorney with evidence-based financial insights during your case
If you and your spouse have significant assets, own a business, or are nearing retirement, your CDFA can be especially valuable in crafting a forward-thinking settlement.
Working with a Financial Advisor
Once the divorce dust settles, you will want to consider a clear path for your future. A financial advisor can help you with things such as
- Setting goals for saving and investing
- Rebuilding your credit and financial stability
- Creating a retirement roadmap based on your new circumstances
- Strategizing ways to meet your housing, education, and long-term financial needs
A good financial advisor doesn’t just help you manage your money but also enables you to build a new sense of security and confidence after this major life transition.
Estate Planning Attorney
Divorce changes everything, including your estate plan. An estate planning attorney will help you
- Update your will, powers of attorney, and healthcare directives
- Help you revise or revoke any trusts
- Ensure your children or other chosen beneficiaries are protected
After a divorce, updating an estate plan isn’t just about removing your ex-spouse, but it also ensures your wishes are legally protected, and your assets go where you intend.
Tax Advisor
Consulting with a tax advisor ensures you understand the full tax implications of any divorce settlement, property transfers, or support agreements. Their expertise can help you avoid unexpected liabilities and protect your financial bottom line going forward.
When Should You Involve These Professionals?
When should you get professional help? Ideally, it should be before you sign anything. Your divorce attorney should be involved from the very beginning. A CDFA or financial advisor can also be brought in early, particularly before mediation or negotiations, so they can help you create a good outcome upfront rather than being called in to fix problems later. Unfortunately, waiting too long can limit your options. The earlier you build your team, the more empowered you will be to make strategic, informed decisions.
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Building Your Strategic Support Team
At Melone Hatley, P.C., we take a holistic approach to divorce. We understand that your case doesn’t exist in a vacuum and affects every aspect of your life. This is why we often collaborate with other trusted professionals in the family law arena to ensure our clients get the best possible support. If you’re navigating a divorce, you shouldn’t go through it alone. With the right team supporting you, you’ll be ready to start that new chapter with a strong foundation for your future. Contact us through our website contact form or call us at 800-479-8124 to schedule a free consultation with one of our Client Services Coordinators.
Schedule a call with one of our client services coordinators today.
