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Considering divorce? Take a few minutes to understand your finances p2

Ending a marriage is not a business decision. Most couples, at least, do not set up timelines with milestones, dependent tasks and Gantt charts.

Nevertheless, there are some practical matters that need attention early in the process. Having a solid understanding of your finances is an important step, and, as we said in our last post, it starts with a credit report.

Full inventory: Insurance companies urge policyholders to prepare an inventory of household items and a list of financial holdings (investment accounts, life insurance policies, and so on). If you do not have an inventory yet, this is the time to prepare one. If you have an inventory, make sure it's up-to-date. Note which items you and your spouse brought to the marriage, and add current appraisals of the more expensive items.

Remember that the inventory should include both physical, tangible assets and financial assets. The inventory should, then, include current statements for all financial accounts. All of this information will be helpful during the property division process.

Separate accounts: Now may be the time to open your own separate banking and investment accounts. Apply for credit cards in your name only. If you are on good terms with your spouse, close joint accounts, including credit card accounts.

Budget: Finally, create a budget for before and after the divorce. Make sure the post-divorce budget includes new items like rent or child care. Again, this will help you and your attorney work through property division, and it will help you anticipate any child or spousal support issues.

This is by no means a comprehensive list, but you should end up with a good idea of what you have and what you will need after you and your spouse split up.

Source: Accounting Today, "The Realities of Divorce," July 2015

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