Divorce Planning Financial Checklist

Legally ending a marriage can be logistically, financially, and emotionally complex. There are dozens of factors to consider when going through a divorce. How long do you need to be separated first? If you have children, where will they live and how will you share custody? What are state laws about marital property? How much will it cost?

To help your divorce go as smoothly as possible, it’s important to prepare ahead of time and create a team that can help you navigate the financial, legal, and emotional challenges of getting divorced.

Initial Considerations When Planning a Divorce

Before you can begin the divorce process, you’ll need to talk with your spouse. You may need to carefully choose when, where, and how to bring up the subject. Try to choose a neutral location and a neutral day—not an anniversary, birthday, or other important milestone.

It may help to talk to a divorce attorney on your own before starting the conversation with your spouse. They can let you know what steps to take, especially if you need a period of legal separation or have children. They can also help you make a plan to protect your financial assets during the divorce process if you and your spouse have accounts or property in common.

Even if you and your spouse plan to keep the process as amicable as possible, divorces can be emotional and difficult. Make sure you have a support network of friends, family, and professionals who can help you through the process. Professional advisors who can assist you through a divorce include:

If you are worried about dividing your property, you may want to work with a certified divorce financial analyst (CDFA) who specializes in pre-divorce financial counseling to ensure an equitable division of assets. For example, if some assets are in one party’s name only, splitting them 50-50 may result in the other party having to pay taxes on their share. Or, if one spouse stopped working to stay home with kids and the other one kept working, only one person may have retirement accounts in their name. A CDFA is trained to navigate these complications.

Legal Preparations

Divorce laws vary from state to state and can impact every step of the process. For example, Kentucky requires couples to be separated for at least 60 days before their divorce can be finalized, while a two-year separation is grounds for divorce in Hawaii. Decisions you make during the separation and divorce process can also impact things like child support and custody arrangements.

A divorce attorney or family law attorney will explain your state laws at the beginning of the divorce process so you know what steps to take to protect yourself, your family, and your assets.

To find a divorce attorney, start by talking to trusted family and friends in your area. You can also ask other legal professionals you have already worked with, such as an estate planning attorney, if they can make a recommendation. You will want to find someone local with whom you feel comfortable.

You also want to plan for the cost of an attorney. Most family law attorneys charge hourly, and this fee can range widely depending on the attorney you work with and where you live. A survey conducted by Nolo found that the average divorce in the U.S. costs $12,780, and $11,300 of that cost is fees for a divorce lawyer. Keep in mind, however, that this includes divorces that take more than a year or that go to trial.

How your divorce proceeds can depend on whether it is an at-fault or no-fault divorce. If you want to file for an at-fault divorce, legal grounds include:

• Adultery
• Abandonment
• Criminal conviction
• Emotional, sexual, or physical abuse
• Mental illness
• Substance abuse

Legal grounds to file for a no-fault divorce include:

• Incompatibility
• Irreconcilable differences
• Irretrievable breakdowns in the marriage

Living Arrangements

If you and your spouse don’t want to live together during the divorce process, you may need to agree on alternate living arrangements in which one spouse moves out of the family home. Be sure to budget for this part of the divorce process, especially if you will be living in separate homes for a while before the divorce is finalized.

If you have children, keep in mind that moving out of the family home can impact custody arrangements. For example, in Maryland, courts consider factors like who is the primary caregiver for a child and which parent lives closest to a child’s school when deciding custody arrangements. While these aren’t the only factors considered, they do impact the court’s decisions. Talk to your attorney before moving out of the family home to ensure that your decision won’t impact other parts of the divorce process.

Child Custody and Support

If you have children, then the divorce process will involve decisions about custody and child support. Two kinds of custody will be decided during the divorce process:

• Physical custody: Where a child lives and which parent they live with, sometimes referred to as “parenting time”
• Legal custody: Who is involved in long-term planning and significant decisions related to a child

There is no one-size-fits-all custody arrangement, and like other aspects of a divorce, the process can vary from state to state. Multiple factors are taken into consideration when making custody and support plans, including:

• Who is the primary caregiver
• Psychological and physical fitness for caregiving responsibilities
• Character and reputation
• Ability to maintain family relationships
• Financial resources
• Length of separation
• Any prior abandonment or surrender of custody

The preferences of children and parents are also taken into consideration. If both you and your spouse want to share custody equally, you will be able to talk with your lawyers to create an arrangement that works. You will also have to come up with a plan for schooling, holidays, and weekends that fits with the rest of your custody plan.

If you are worried that shared custody is not in the best interest of your child or children, mention that to your divorce attorney early on in the process of working together. They will be able to advise you on steps to take to protect the well-being of your child or children.

Assets and Property Division

Part of divorce is dividing up your assets, both physical and financial. These can include:

• Real estate
• Vehicles
• Furniture and other household items
• Banking and investment accounts
• Valuable property such as art or jewelry

You will need to create a list of all your assets and their value to begin the process of property division. If you have a prenuptial or postnuptial agreement, this will guide how you divide your property. Otherwise, you’ll have to work within your state laws.

Nine states in the U.S. are community property states, meaning that couples are required to equally split all assets that were acquired during their marriage. However, debts and assets acquired before the marriage are not considered community property and belong to the spouse who originally owned or owed them. The community property states are:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

However, most states are common law property states, which means assets purchased during a marriage are owned by one spouse unless both names are on the title or it was bought from a joint account. Debts also belong to the person whose name they are in, not to both spouses.

Common law property states follow the principle of equitable distribution during divorce proceedings. This is different from equal distribution. Equitable distribution tries to create a fair distribution of assets by looking at a variety of factors, including:

• The length of the marriage
• Each spouse’s financial and practical needs
• Financial contributions made during the marriage
• Other, nonfinancial contributions made during the marriage
• Custody arrangements for children

If you and your spouse are willing and in agreement, you aren’t required to have a third party help you divide up your assets. However, you should work with a financial advisor and divorce attorney to ensure that the property division is fair to both parties.

Financial Management

Throughout the process of divorcing, you will need to have a variety of legal documents and paperwork on hand. Organizing this paperwork, including your financial information, will help the process go more smoothly. It will also help you protect your property and assets because you will know exactly what is being discussed at every point.

Collect and make copies of:

• Marriage paperwork: Marriage license, as well as any prenuptial or postnuptial agreements
• Tax returns: Federal, state, and local tax documents for at least the past five years (including your spouse’s if you file separate returns)
• Real estate: Deeds, mortgage documents, appraisal information, property tax information, cost basis of the home, contracts/invoices for major renovations, and any rental property records
• Vehicle information: Deeds for cars, boats, or other vehicles
• End-of-life plans: Wills, power of attorney, and advance healthcare directives
• Business documents: Any receipts, tax paperwork, and payroll information; registrations, trademarks, or patents owned by one or both spouses
• Financial statements: Banking, investment, and retirement accounts, as well as any Health Savings Accounts or flexible spending accounts
• Debts: Records for home, auto, student, and personal loans, as well as credit card statements
• Insurance: Records for life, auto, homeowners, personal liability, or other insurance
• Valuable personal property: Receipts for major purchases or previous appraisals for art, jewelry, and other heirlooms

If you are worried that your divorce will be contentious or your spouse may attempt to hide assets, gather these documents and make copies before initiating the divorce process.

You will also want to change the passwords on your bank, retirement, email, social media, and other accounts. This will help keep both personal communications and communication with your attorney and any other advisors private throughout the divorce. In the case of a contentious divorce, it also helps prevent your spouse from locking you out of your personal accounts if they know or can guess your passwords.

Credit Scores and Debt

Filing for divorce doesn’t directly impact your credit score. However, if you have late or missed payments because you are distracted by divorce proceedings, have trouble accessing your accounts, or put more expenses on a credit card than usual due to the cost of the divorce, your credit score can take a hit.

To protect your credit during a divorce:

• Set reminders: Create alerts or calendar reminders to make payments on time.
• Pay something: Make at least the minimum payment on all debts, even if you are unable to pay a bill in full.
• Open new accounts: Remove yourself from joint accounts and open new accounts in your name only to prevent lenders from coming after you for your spouse’s debts.
• Buy identity theft protection: Divorce can make you a target for scammers, including your ex.

Communicating the News

Finally, make a plan for communicating the news to other people in your life. If you have children, talk with your spouse ahead of time to decide how you want to share the news with them. Be prepared to answer questions, and be as reassuring as possible.

Outside of the family, start with trusted friends or family members. If you don’t feel ready to share the news on your own, you can enlist someone whom you trust to tell others. It’s OK to start small; tell only people who need to know at first, but expect that the news will spread once you start sharing it.

The Bottom Line

Whether the split is amicable or contentious, a divorce can be time-consuming, emotional, and expensive. Staying organized from the beginning will help you manage the process.

Take time to understand divorce laws in your state, as these will impact every part of the process, including how custody is arranged, how your property is divided, and the length of time you need to be separated before the divorce can be finalized. To manage the process, talk to an attorney early on to understand the steps involved, make a plan, and start gathering the materials you will need.