Splitting Up? How to Financially Prepare for Divorce

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Photo by Steve Buissinne from Pixabay 

By Dmitriy Borshchak

So you’ve decided to call it quits. Ending a marriage is difficult enough emotionally, and the last thing you need is to also feel financially unprepared. While the legal process of divorce will split your assets, it’s important to take steps now to protect yourself. The good news is, that with some prudent planning, you can emerge from divorce in a stable financial position.

This article provides practical advice on how to prepare your finances before and during divorce proceedings. We’ll walk through the steps to take as soon as you decide to split. How to budget for legal fees and life after divorce, and strategies to consider for dividing assets and debts.

Going through a divorce is challenging, but by planning ahead you’ll gain more control over your financial future. Now take a deep breath – you’ve got this. With determination and by putting one foot in front of the other, you will get through this difficult time.

Assess Your Current Financial Situation

The first step is to get a clear picture of your current financial situation. Go through your statements and records to determine your assets like the value of your home, vehicles, investments, bank accounts, and retirement funds. Also, list your liabilities such as mortgages, loans, and credit card balances.

Calculate your monthly income and expenses. See how much you’re earning from your job, business, rental property or other sources. Then tally up essential costs for housing, food, transportation, insurance, utilities, debt payments, and everything else. The difference between your income and expenses is your disposable income – you’ll want to split this fairly.

Make copies of tax returns, bank statements, investment summaries, insurance policies, wills, and other important documents for the past few years. These provide evidence of your financial history and situation. Store copies in a safe place in case they’re needed for legal proceedings.

If you have joint accounts or own major assets together, now is the time to separate them. Open individual bank accounts and consider refinancing jointly-held properties under one name. The less financial entanglement, the smoother the divorce process will be.

Talk to a lawyer from a family Law firm. A professional can help analyze your situation, determine how best to split assets and create a settlement that’s fair to both parties. They can also suggest steps to protect your credit and secure your financial future post-divorce. The sooner you get your finances in order, the more prepared you’ll be for the legal divorce procedures.

Going through a divorce is difficult enough without money worries. By assessing your situation upfront, separating accounts, and consulting an expert, you’ll gain clarity and confidence in this challenging transition. Stay focused on the light at the end of the tunnel – your new beginning.

Make a Budget for Your New Life

Now that the relationship is ending, it’s time to figure out how you’ll manage on your own. The first step is creating a realistic budget.

Make a list of your income and expenses

Go through your bank statements and bills to see how much you’re making each month and where it’s all going. Be sure to account for essential costs like rent, food, transportation, and childcare if applicable. Also list any joint expenses you currently share to determine how costs may change.

Estimate your new living expenses

Factor in things like potentially paying for your place to live, increased utility bills, and separate insurance policies. If you have kids, account for additional costs like activities, clothing, and school expenses. Overestimate rather than underestimate to avoid financial struggles down the road.

Look for ways to cut costs if needed

See if you can reduce or eliminate any subscriptions, dine out less, or find a more affordable living situation. Even small changes can help make your new budget realistic and sustainable.

Discuss finances respectfully with your ex

Having a constructive conversation about how you’ll split assets and handle any joint financial responsibilities is important. Be willing to compromise when possible to avoid unnecessary conflict. The less financial entanglement with your ex after the divorce, the better for both your well-being and future.

With some organization, budgeting, and by planning ahead, you can gain control of your finances and feel more at ease about starting your new life as a single person. While it may not always be easy, having financial independence will give you a strong foundation to build upon.

Protect Your Credit Score

Going through a divorce is stressful enough without having to worry about your credit score taking a hit. Protecting your credit should be a top priority right now.

Monitor Your Credit Report and Score

Check your credit report and score regularly during this process to catch any suspicious activity early. Dispute any unauthorized charges or accounts right away. Your ex may know personal details that could be used to open new accounts in your name. Be on high alert for identity theft.

Don’t Close Joint Accounts Yet

If you have joint credit cards or loans, don’t close the accounts yet. Closing accounts can hurt your credit utilization ratio and length of credit history, both of which make up 30% of your score. Instead, ask to be removed from the accounts so you’re no longer responsible for payments. The accounts will still show on your reports, but any late or missed payments by your ex won’t damage your score.

Pay Down Balances

Pay down or pay off high-balance accounts like credit cards. High balances hurt your score the most. If needed, you may want to temporarily reduce spending on other things to put more towards debt repayment. The lower your balances, the less interest you’ll pay and the higher your score will go.

Don’t Default on Payments

No matter what happens, keep making at least minimum payments on time. Late or missed payments severely damage your score and stay on reports for years. Set up autopay or payment reminders if needed. Your credit score may feel like the least of your worries right now, but protecting it will benefit you financially long after the divorce is finalized.

Staying on top of these steps will help ensure your credit score comes out of the divorce unscathed. While the legal process moves forward, make credit score protection a financial priority so you have one less thing to stress over during this difficult time. Focusing on self-care will help you stay empowered to safeguard your financial well-being.

Split Up Joint Accounts and Assets

When going through a divorce, separating your joint finances is critical. This means closing joint accounts, dividing assets, and making a plan to handle debt. It may feel overwhelming, but tackling it systematically will help set you up for financial independence.

Close Joint Bank Accounts

The first step is closing any shared bank accounts, like checking and savings accounts. Open new individual accounts in your own name and transfer your portion of the funds. Make sure to cancel any automatic bill payments or deposits linked to the joint accounts.

Divide Investment and Retirement Accounts

Work with your financial advisor or investment firms to split up investment portfolios and retirement accounts (401ks, IRAs, etc.). They can help determine the fairest way to divide them based on your state’s laws. You’ll want to open new individual accounts to hold your portion of the funds.

Determine a Plan for Real Estate and High-Value Assets

If you own a home, vehicle, or other major assets together, decide how you want to handle them. Do you want to sell and split the proceeds? Have one person refinance and buy out the other’s share? Get professional appraisals to determine current market values before negotiating with your ex.

Make a Debt Payment Strategy

Sadly, in many divorces, there is also shared debt to contend with, like mortgages, auto loans, and credit cards. Work with your lawyers and financial advisors to allocate responsibility for fairly repaying debts based on your income and circumstances. Then make a plan for how payments will be made going forward.

Splitting up finances may be complicated, but with open communication and professional guidance, you can disentangle yourself financially and gain independence. Stay calm and systematic, get everything in writing, and don’t hesitate to ask questions. You’ve got this! With time and effort, you will establish yourself financially solo.

Speak With a Financial Advisor About Retirement Accounts

Speaking with a financial advisor about your retirement accounts during a divorce is critical to protecting your financial future. A financial advisor can help ensure your needs are met and avoid unnecessary penalties.

Review Account Details

Sit down with your financial advisor and review all retirement accounts like 401(k)s, IRAs, and pensions. Provide account statements so they understand your balances and investment allocations. Discuss how accounts can be divided while avoiding early withdrawal penalties and maintaining the tax-advantaged status. Your advisor may recommend splitting accounts equally or offsetting accounts against other assets.

Consider a Qualified Domestic Relations Order (QDRO)

For accounts like 401(k)s, a QDRO allows splitting the account between spouses without penalty. The QDRO specifies how the account should be divided, either splitting the balance equally or allocating a percentage to each spouse based on the length of the marriage. The QDRO is submitted to the plan administrator who then splits the account.

Look at Spousal Benefits and Survivor Options

If you’re close to retirement age, work with your advisor to evaluate spousal benefits from pensions or Social Security. They can help determine if you’re eligible for benefits based on your ex-spouse’s earning records and if so, how to claim them. You should also review survivor benefit options which provide income to the surviving ex-spouse. Your advisor can help evaluate if changes need to be made to account beneficiaries or survivor benefit options.

Consider Rolling Over Accounts

If part of an IRA or 401(k) is awarded to you as part of the divorce settlement, you may want to roll it over into an account in your name. Your financial advisor can help facilitate the transfer while maintaining the tax-advantaged status. Rolling over the funds gives you full control and flexibility over investment options that suit your needs.

A financial advisor plays an important role in helping you navigate dividing retirement accounts during a divorce. Take advantage of their knowledge and experience to avoid unnecessary taxes or loss of retirement funds. With the right planning and advice, you can get through this difficult process while financially protecting your future.


You’ve been through enough stress and drama in your relationship, the last thing you need is financial trouble on top of it. Now that you’ve made the difficult decision to split, take steps now to make sure you come out the other side in a good place. Talk to a financial advisor, separate accounts, and budget wisely. Though it may not seem like it now, the pain will lessen over time and you will heal. Focus on surrounding yourself with your true supporters, do things each day that make you happy, and be kind to yourself through the process. This is just one more challenge that will make you stronger and wiser. You’ve got this! Stay empowered and look ahead to the bright future waiting for you.

About the Author

Dmitriy Borshchak

Dmitriy Borshchak is a caring family lawyer in Columbus, Ohio, and the founder of The Law Office of Dmitriy Borshchak. Although he initially explored a brief career in medicine, Dmitriy discovered his true passion in helping people navigate tough situations through the legal field.

At his firm, Dmitriy deals with various complex legal matters like divorce, child custody, child support, marital agreements, fathers’ rights, and spousal support. In every case, he focuses on managing and reducing his clients’ financial and legal risks. Dmitriy takes a personalized and systematic approach, providing clear and straightforward advice to his clients. Regardless of the case’s difficulty, he is committed to strongly advocating for his clients’ rights and best interests.

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