- Keeping solid records
- Understanding your paperwork
- Building good credit
- Thinking about the future
- Developing financial literacy
- Creating a prenuptial or postnuptial agreement
- Caring for your personal and marital health
The last thing you want to consider when you get married is divorce. And yet, you still go down the aisle knowing – in the far reaches of your mind – that a large percentage of marriages end up in divorce court.
Safeguarding your future in the event of divorce
Until the divorce process beckons, you may never give a thought to all those unromantic legalities that accompany it. And yet, you would never consider going into business with someone without putting some important legal protections into place.
The fact is, marriage is a legal construct similar to that of a business partnership. It affects nearly everything you do as a couple, from how you buy and sell marital property to how you pay debt to how you care for your children.
With that said, we suggest that you owe it to yourself to safeguard your future ... just in case your marriage becomes another divorce statistic. Here are seven suggestions.
1. Keep solid records
It’s common for married couples to open joint bank accounts, take on joint credit card debt, and purchase a marital home together. The property you may have owned before the marriage was, at one time, considered your separate property. But by the time you’re preparing for divorce proceedings, its ownership may not be so clear-cut.
Commingling finances while you're married may be common, but it can end up muddying the water if you decide to break up.
- Did you own your house before you got married? Do you pay the mortgage from a joint bank account?
- Did one of you inherit money, but you made investments with that money in both of your names?
- Did you or your spouse play around with cryptocurrency before your marriage? Have the two of you, as a couple, made any transactions within the crypto account?
Any of the above acts of “commingling” could make the division of your marital assets more complex. In divorce, it’s not enough to just have “general information” about your financial life. So, if you can’t keep your separate property separate during your marriage, do keep solid records of every transaction so property division is as fair as possible if you end up parting ways.
2. Understand your existing paperwork
Do you fully understand the legal implications of your existing paperwork? It’s a good idea to be able to answer the following questions before you begin to craft a marital settlement agreement with your soon-to-be ex.
- How is your house deeded?
- Who is on the mortgage?
- How are your cars titled and registered?
- Under whose name is your homeowners’ insurance? Your health insurance?
- Do you have a joint estate plan?
- Do you understand your investments?
- Do you know how much debt you have?
Your financial life would go under the microscope in divorce. This is because state divorce laws require you to either have an “equitable distribution” or a 50/50 split of your marital assets and debts. It’s important to fully understand your assets and liabilities so you aren’t blindsided by this.
Free download: Property Division Spreadsheet
3. Build good credit
If you’ve been married for a while, chances are your credit is firmly entangled with your spouse’s credit. This is fine until you need to get credit on your own after a divorce.
Know your personal credit score. Establish your own credit before it becomes an issue. If possible, maintain credit lines and cards in your own name throughout your marriage, and pay them promptly every month. If your marriage fails, you already have your own credit history established, so you don’t have to start from square one.
4. Think about your future
You and your spouse may have created a joint estate plan, making important decisions for the future together. But many of these documents would need to be reconsidered in a divorce case. Here are some questions to ask yourself:
- Is your spouse the sole heir to your estate or named as a beneficiary in trusts, retirement accounts, payable-on-death accounts, or life insurance policies?
- Is your spouse named as your financial or medical power of attorney? How about relatives of your spouse?
In some states, designations naming your spouse as heir or beneficiary are automatically voided at the time of issuance of a divorce decree. It's smart to know exactly how a potential divorce would impact each aspect of your estate plan in your particular state.
5. Develop financial literacy
Your marriage is a financial partnership, and both you and your spouse should fully understand all aspects of your financial life. This includes your investments, retirement accounts, mortgage, and other pertinent financial information. Try to answer the following questions:
- How much debt do you have?
- How much is your house worth, and how much equity do you have?
- Would you be able to qualify to refinance your home by yourself in the event of a divorce?
These financial matters would be considered in a potential divorce. Arm yourself with knowledge now so you are better equipped for your future.
6. Prenup or postnup
Prenups and postnups aren’t just for the rich and famous. They are for everyday couples who have children or own anything of value, separately or jointly, in their marriage.
Prenuptial agreements are created before marriage. Postnuptial agreements are created after you’re already married. Both are legal contracts negotiated and agreed to by both partners that specify exactly how things would play out in the event of a divorce.
If you can work out these important matters together with sound future goals in mind, you will likely circumvent many of the highly emotional and contentious issues that overwhelm divorce negotiations.
Read: How to Write a Postnuptial Agreement with or without a Lawyer
7. Don’t ignore your personal and marital health
Despite the hope for happily ever, know this: Marital happy endings generally take a lot of hard work, commitment, communication, and cooperation.
Healthy marriages consist of healthy partners. Romance is fun, but the romantic phase of marriage is short. It’s the emotional health of the individuals, the friendship, and the mutual respect partners have for each other that help promote longevity in marriage.
When spouses are fulfilled as individuals and as partners, this is what sustains the relationship “‘til death do us part.” But if divorce becomes inevitable, this same respect and communication can help couples move through it more amicably.
Divorce doesn’t have to be contentious and messy. When you commit to communication and cooperation through an uncontested divorce or mediated divorce, it can be far more amicable, efficient, and inexpensive. At Hello Divorce, we offer customizable online divorce plans to support you through your transition. We also partner with divorce coaches and divorce mediators, whom you can work with at the flat rates mentioned on our services page.
To gather more information about what Hello Divorce offers, please schedule a free 15-minute consultation to speak with one of our account coordinators.
