Understanding your Financial Situation is Critical in Case of Divorce (Pt 1)

A young woman on a lap top. Next to her are diagrams of pie charts and graphs.
Understanding your financial situation is very important, especially in case your marriage ends and you need to know where you stand!

Most Michigan families have one spouse who deals with the family’s financial situation and one spouse who doesn’t. It’s pretty standard for most couples to have one person in charge of keeping track of the budget and paying the bills, while the other spouse relies on them to provide information about savings, budgetary changes, and debts. 

But is that the smart way to do it? Financial experts say no. It might be usual, but it’s apparently very unwise, especially with divorce rates so high right now. Because if your marriage ends and you’re the spouse who doesn’t know anything about your financial situation, you could end up with some serious problems on your hands!

Why should you be aware of your financial situation?

We get it – maybe you’re not good with numbers, or paying bills is more boring to you than watching the stock market. But not taking the time to do it now, while you don’t need the info, puts you at a considerable disadvantage if a situation ever comes up where you need to know, and you don’t have that info. Family law attorneys spend considerable time reconstructing family financial information when the need arises. So when we say these aren’t usually situations that come with much warning, we know what we’re talking about. 

Knowing what your assets are, and what they’re worth goes a long way towards helping you make informed choices in the event of an unplanned change. A sudden death in the family, a divorce, or even an unexpected terminal diagnosis can all come out of left field. The more prepared you are, the less time you’ll have to devote to assembling information under pressure. And the less time your attorney will have to spend gathering that information, which means you’ll save on attorneys fees in the long run.

So how do you start, and what do you need to know?

One way to get rolling on developing an understanding of your family’s finances is to make a list of your assets. Write down all of your financial accounts, including IRAs and 401 ks. Also, make sure that both you and your spouse know how to access those accounts! (You both need to know passwords and the account holder’s names!) Write down the name of the asset or account, the address and account number, the web site and passwords, and any other relevant info that would allow either of you access without the other one.

Remember to also include your physical assets, like your cars and your house, and any relevant information about their ownership, or factors affecting their future value. Don’t leave anything out. Include anything that could count as an asset to your finances, like airline miles and vacation timeshares, since they have financial value but often aren’t included in financial portfolios.

Make sure, if you’re getting divorced, that your assets are protected!

Join us next time, when we’ll be looking at a few more things you need to include on your list, and what to do with it once you’ve created it. It isn’t an exciting topic, we know. But having to add one more unpleasant item to an already long list of issues you need to address during a traumatic time in life is far worse! So as the boy scouts would say: be prepared!

And remember, if you’re getting divorced, you’re far better off getting help from a divorce attorney who’s had decades of experience helping Michigan folks deal with their assets and debts during divorce. Here at The Kronek Firm, our helpful and highly skilled family law attorneys have handled every kind of financial situation imaginable when it comes to divorce. Just call 866 766 5245 and we can help you too.