Women often face a variety of unique financial challenges when separating from a partner. Whether you expect to split from your spouse or not, it’s important to take steps to protect yourself financially in case of divorce.
By Richard W. Stout III and Thomas Britt
No one gets married with the intention of divorcing. Yet the reality is that divorce happens—and it happens more often than we’d like to admit. One study by Bowling Green State University revealed that in 2018, more than one million women in the United States experienced divorce. Meanwhile, the Covid-19 pandemic prompted a new wave of divorces. Data shows that in the U.S., the divorce rate skyrocketed as couples endured months of lockdown together.
Indeed, divorce can be an emotionally draining experience for all parties. But it can also be financially devastating—especially for women who aren’t prepared. If you’re navigating divorce, protecting yourself financially is critical to ensure an equitable settlement and secure your financial future.
Consider These Steps to Protect Yourself Financially Before, During, and After Divorce
1. Before the Divorce Process Begins, Get Organized
Researchers estimate that 90% of all women will be solely responsible for their household finances at some point in their lives. In other words, it’s wise for women to protect themselves financially, regardless of marital status.
If you anticipate any change in your family dynamics, a good first step is to get organized. Keep a record of all financial accounts, property, and other assets owned by you and your partner. You should also classify all assets as separate or marital property.
Be sure to save copies of all corresponding documents so they’re readily available if you need them. Beyond financial documents, do your best to locate all estate planning documents, prepaid funeral arrangements, and premarital agreements, if applicable.
Other examples of information you may need during the divorce process may include:
- Personal balance sheet/financial statements
- Inventory of joint and separate property
- Bank and investment account statements
- Real estate deeds
- Mortgage/loan documents
- Credit card statements
- Wills/trusts
- Insurance policies
In addition, keep track of your login credentials for online access to your bank accounts, brokerage firm, and other financial institutions. Creating an organizational system that works for you will make it easier for both you and your team of advisors to access important information once the divorce proceedings begin.
2. During the Divorce Process, Leverage Your Team of Experts
In addition to your legal team, it’s important to assemble a team of tax and financial advisors who can help protect you financially during the divorce process. You’ll want to share the information you gathered prior to the divorce proceedings so that everyone is on the same page when they begin.
If you don’t have recent appraisals for real estate and other highly valued property, be sure to obtain your own professional appraisals. Your team of experts can advise you on the financial implications of splitting your collection of property and other assets. For example, there may be tax consequences or other restrictions that reduce the value of your settlement.
Finally, and as unpleasant as it may seem, beware of the possibility that your partner may try to hide assets from you during the divorce process. For women who haven’t played a major role in the family finances, this step is especially important to protect yourself financially in divorce.
Even if you don’t have ownership rights to your spouse’s non-marital property, you’ll want to be aware of it, nonetheless. Depending on the laws in your state, the court may consider the value of all property when determining an equitable settlement.
Though finding hidden assets can be challenging, it’s not impossible. If there’s no obvious paper trail, past tax returns can be a helpful place to start. Alternatively, if you suspect your partner may be hiding a substantial amount of money or property from you, you may want to consider hiring a professional who specializes in asset search and investigation.
3. After the Divorce Process is Final, Take Ownership of Your Finances
Protecting yourself financially in divorce doesn’t end once the divorce proceedings conclude. As you adjust to your new situation, it’s important to take ownership of your finances so you’re ready to navigate life independently.
It’s possible that your divorce settlement may be all you need to sustain your lifestyle post-divorce. One thing worth noting, however, is that spousal support isn’t nearly as common as it once was. Today, data shows that spousal support is only awarded in about one in 10 divorces. Regardless of your family dynamics, it’s typically best to assume you’ll be responsible for supporting yourself post-divorce.
Either way, you’ll want to develop a personal budget and long-term financial plan that reflects your new circumstances. Additional post-divorce considerations may include:
Additional post-divorce considerations may include:
- Social Security benefits. If you’re divorced but your marriage lasted at least 10 years, you can still collect benefits on your ex-spouse’s record. This is true even if they have remarried, but not if you remarry.
- Insurance needs. The two primary types of insurance that typically come into play during a divorce are health insurance and life insurance. Be sure to revisit your policies and ensure you have proper coverage post-divorce.
If you haven’t worked with a financial advisor in the past—or your partner took the lead in the family finances—consider engaging a financial planner. Many financial planners, including Benchmark Wealth Management, have extensive experience helping women navigate and secure their finances post-divorce.
Protect Yourself Financially in Divorce with the Help of a Trusted Advisor
Divorce can take a toll on your emotions and finances. For women anticipating or going through divorce, the good news is there are many ways to protect yourself financially and set yourself up for long-term financial success.
With the right preparation and team of advisors to support you, you can continue to thrive post-divorce. If you’d like to speak with a member of our team about protecting and taking ownership of your finances, please get in touch.
About Rick
Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.
About Thomas
Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 20 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional and holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. He earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.
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