Money is one of the biggest things that complicates relationships, so it is no surprise that it complicates divorce as well. Divorce is not only a difficult emotional time but it can also be fiscally difficult for those who must wade through money issues on top of potential child custody problems, new living situations, and starting to live a very new life. It is no wonder that divorce is listed just below the death of a spouse as one of the most stressful life events possible!
Handling Money in a Divorce
There are some ways to approach financial issues during a divorce that may relieve some of the pressure from both parties and forestall future arguments.
First, try to pay off all credit cards with both spouses’ names on them and then cancel them. You may also want to cancel the card and continue to make payments if you cannot pay it off all at once. If you do not do this, your former spouse could continue to charge on the card and the company may try to hold you responsible. It is important to remember that a divorce has no effect on who is responsible to the credit card company; the divorce agreement simply designates who will pay for various debts as they come due. This means that if the responsible spouse does not pay, the credit card company can still sue you for the balance. You would then be forced to take your spouse back to court to enforce the divorce agreement. This is a situation you want to avoid if at all possible, and the easiest way to do so is to close all joint credit cards.
Similarly, jointly shared bank accounts should be divided as soon as possible. Many couples choose to keep one name on each account if they have dual checking or savings accounts, while others close all bank accounts and open new individual accounts. Remember that the money that is in the accounts is not automatically “yours;” you must abide by the terms of the divorce agreement in dividing the assets.
Handling a life insurance policy can cause potential difficulties, as well. If your spouse is the beneficiary, as is often the case, she may negotiate the value of this policy as part of the divorce agreement. You may be able to make a “life settlement” with your spouse that designates a new beneficiary, such as a parent or child, in exchange for a cash payment. This will prevent future legal problems if you die and your spouse attempts to make a claim for the policy.
Divorce is never pleasant and money is not most people’s favorite topic of discussion. However, it is very important to take care of these issues before they become problems. If you are looking for a lawyer to represent you in a divorce and help you deal with money issues, call the Men’s Legal Center. We offer experienced attorneys who will help you navigate the difficult process of dividing your assets and debts.