How to Protect Your Finances When a Spouse Files for Divorce

by Teo Spengler
In a divorce, marital assets and debts are divided.

In a divorce, marital assets and debts are divided.

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The end of a marriage signals the separation of a couple's finances and neither spouse is likely to end up richer at the end of a divorce than at the beginning. Even if you and your spouse part amicably, it is prudent to stay on top of both sets of finances during a divorce.

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Know Your Legal Protections

You may feel very vulnerable after you are served with a divorce filing, but the law already has protections in place to assist you. In many states, the divorce filing triggers an automatic restraining order that prevents your spouse from selling, hiding or in any way disposing of property other than amounts required for reasonable living expenses and attorney fees for the court action. A spouse is also prohibited from increasing marital debt by taking money from the couple's line of credit or cash advances from credit cards. The law also prohibits him from removing you or the kids from his insurance, or changing the beneficiary designation on his insurance policies or retirement accounts.

Know Your Assets

The earlier you start to understand your finances, the better. The days of a husband doling out household expense money to a grateful wife are in the past; in modern times, neither spouse may have the exclusive knowledge of family finances. Find out where your spouse works, how much he earns and where he puts his money, and share similar information about your earnings. Property a spouse had before your marriage or inherited during it may not impact your divorce property settlement, depending on your state.

Know Your Divorce Laws

In order to protect your finances during a divorce, you need a basic understanding of the divorce laws in your state. Many states use the community property system to divide marital assets, attributing all money earned by either spouse during the marriage to the two spouses equally. Assets held by a spouse before marriage or inherited during the marriage are considered the sole property of that spouse. Other states use an equitable division system in which a court looks at all money belonging to both spouses and determines an equitable division. Understanding your state's property division method will help you identify the information you need to know about your spouse and his money.

Make Copies of Everything

You can obtain copies of documents during divorce discovery, but it is better to have as much information as possible going into the divorce. Gather and copy recent bank, investment and retirement account statements, and state and federal tax returns for the past three years. Ideally, do this for your separate accounts, marital accounts and your spouse's separate accounts. If your spouse operates a business, copy his business records as well. This can be quicker if you duplicate computer records instead of making paper copies. Obtain information about your spouse's health benefits as well, especially if you or the children are covered under his policy.

Separate Finances

The moment the two of you separate, think like a divorced person. Establish a new bank account in your name alone and do not deposit post-separation income or any other separate revenue into joint accounts. Apply for new credit cards in your name. Prepare a list of all valuable assets belonging to your family and take pictures of jewelry, art and antiques. Provide your divorce attorney with this list and the copies you made of financial documents.