Divorce Finances: Preparing for a Successful Divorce
Bob Leonard Law Group, PLLC
Oct 22, 2021
Preparing for a Successful Divorce: Knowledge is Power
Divorce is never simple, but preparing for a successful divorce gives you the winning edge. It's important to be smart and keep track of everything. The more solid documentation you have, the better your strategy will be.
Your divorce may be something you have thought about for awhile or it may be that an event has caused an immediate breakdown of your marriage. You may have been served with divorce papers when you were not expecting it.
This is an emotional time, but knowing as much as you can will help you and your attorney develop a strong and positive plan to preserve your assets .
Preparing for a Successful Divorce: Collecting Financial Information
Collect the following information right away to prepare a Monthly Income Worksheet :
- Income Tax Returns. Completed personal, corporate, partnership, joint venture, or other income tax returns (federal, state and local), including W-2, 1099, and K-1 forms, in your possession or control for the last 3-5 years, including all amended tax returns Do you expect any tax refunds? If so, list them.
- Business Financial Statements.
- Net worth statement – balance sheet or list of assets and liabilities
- Income statement – income and expense statement (profit and loss or P&L)
- Cash Flow statement
- Income Information. Current income information, including payroll stubs and all other evidence of income (investment property, rental/lease agreements, dividends, interest, royalties, lottery winnings, etc.) since the filing of your last tax return.
- Personal Property Tax Returns
- Banking Information. All monthly bank statements, passbooks, check registers, deposit slips, canceled checks, and bank charge notices on personal and business accounts, certificates of deposit, and money market and retirement accounts from banks, savings and loan institutions, credit unions, or other institutions in which you or your spouse has an interest
- Medical Insurance Information
Maintaining your financial security is one of the most important considerations when facing a divorce. Before final separation an agreement will need to be reached as to how to divide all the marital assets and the terms of financial responsibility for and custody of any children. This will need to be in the form of a written agreement that is endorsed by the court.
Preparing for a Successful Divorce: Compile Your Expenses
Once you have your records gathered, take the time to prepare a comprehensive list of your expenses. Review your bank and credit card statements for a period of at least 6 months to find your actual expenditures. If there is anything you pay annually. be sure to include it on your list (for simplicity’s sake, divide annual expenditures by 12 so that you are accruing the amount you need to pay over the entire year).
Review the following to compile a complete list of monthly expenses you will call your Monthly Expenses Worksheet:
HOUSEHOLD EXPENSES
- Housing: If you pay rent, just list the rent that you are presently paying. A house payment typically includes interest, principal, taxes and insurance. However, if you pay taxes separately, please list that here
- Repairs and Maintenance: repairs and maintenance include plumbing, electrical repair, air-conditioning, heating, appliance repair and service, lighting, exterminator service, pool, hot tub, burglar alarm. Services include yard maintenance, tree service, fertilizing, and spraying.
- Utilities: This category includes, gas, water, electricity, and trash. Be sure to look at an annual amount since costs can be higher during certain times of the year.
- Telephone: This might include your home telephone, or your cellular telephone.
TRANSPORTATION
- Car Loan or Lease Payment: Enter the amount of your car payment per month.
- Auto Insurance: Pull your policy to see a breakdown by driver. If it does not show on your policy, contact your agent.
- Gasoline: List your average monthly cost.
- Automobile Maintenance and Repairs: You can look at historical data, but each year your car ages, the repair may be higher. Put your vehicle registration and inspection costs here. Also put your oil changes here.
INSURANCE
- Life: If you have life insurance premiums taken out of your pay check, account for this here and not in your itemized “ Monthly Income Worksheet “. (You don’t want to double list this item.) If you have a life insurance premium that is not deducted from your pay check, show the monthly cost.
- Health: If you have health insurance premiums taken out of your pay check, account for this here and not in your itemized “ Monthly Income Worksheet “. (You don’t want to double list this item.) If you do not carry health or hospitalization insurance, but coverage is dependent upon your spouse, as long as you are married, find out what separate coverage for yourself will cost by contacting a local insurance agent.
- Other Insurance: If you have other insurance such as disability insurance, renter’s insurance, liability insurance or insurance on scheduled items like jewelry or art, list the premiums here.
FOOD/GROCERIES
- Groceries: Include all average monthly grocery expense for food and non-food items for each person who will be living in your household during the divorce process. You can use your annual average here and go up or down depending on whether there will be fewer people in your house.
- Dining Out: Include the average monthly cost for each meal eaten outside the home including work lunches.
- School Lunches: Include this if you have children in your household and pay for lunch at school.
MEDICAL (Out of Pocket)
This is where you average uncovered doctor, dental, and drug costs including co-payments, and deductibles.
EDUCATION
Please include an average of the cost of school supplies, tuition payments, and activity fees for you and your children.
PERSONAL
- Grooming: Includes haircuts, hair color, barber shop expenses, manicures and other personal care services.
- Clothing: Include the average cost of clothing per month for you and anyone who will be in your household.
- Cleaning: Refers to dry cleaning, laundry and supplies.
- Uniforms: Refers to uniforms for work. Include children’s athletic uniforms under child care.
CHILDREN
- Child Care: List your average monthly cost for babysitting or daycare so you can work.
- Extracurricular: List costs for lessons, sports, competition, for children in your household.
ENTERTAINMENT
List the average costs of movies, internet, cable or satellite, eating out or other activities.
DUES (Union or Professional) AND BUSINESS EXPENSES
Includes all typically deductible business expenses, dues and membership fees for professional organizations.
OTHER
If I have forgotten anything, list it here.
Preparing for a Successful Divorce: Review Your Finances with Your Attorney
Now that you have taken a giant leap in preparing for a successful divorce , you and your attorney are ready to develop a winning game plan.
817-336-8500
info@bobleonardlawgroup.com
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