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Fall is often a season for getting organized. With summer ending, children returning to school, and the holidays and year-end approaching, many people take stock of their finances and start planning for the months ahead.
If divorce has been on your mind, this can also be an important time to gain a clearer understanding of your financial picture.
You do not need to have decided to file for divorce to start becoming more informed about your finances. In fact, understanding what you own, what you owe, what you earn, and what your household costs can help you have a more productive conversation with a New Jersey family law attorney about your options.
Here are some areas to include in your fall financial checkup.
Start by identifying the bank accounts held by you and your spouse. This may include:
Reviewing recent statements can help you understand your family’s typical cash flow, recurring expenses, account balances, and significant transactions.
Avoid making significant withdrawals, transfers, or other changes to marital funds simply because you are considering divorce. Speak with an attorney about your circumstances before taking action involving jointly held assets.
Divorce involves more than determining who keeps the house. Investments, retirement benefits, business interests, vehicles, valuable personal property, and other assets may all need to be identified and evaluated.
New Jersey permits courts in divorce cases to equitably distribute property legally and beneficially acquired by either spouse during the marriage, subject to certain exceptions. “Equitable” does not necessarily mean that every asset will simply be divided 50/50.
Your inventory might include:
Gathering information does not mean you have decided how these assets should ultimately be divided. The goal at this stage is simply to understand what exists.
Assets are only one side of the financial picture.
Make a list of mortgages, home equity loans, credit card balances, auto loans, personal loans, student loans, tax liabilities and other outstanding debts.
Pay attention to accounts held jointly. Knowing whose name appears on an account, the current balance, and how the debt was incurred can be important when evaluating the overall marital financial picture.
Income can play a significant role in issues such as alimony and child support.
Gather recent:
New Jersey’s alimony statute directs courts to consider numerous factors, including the parties’ actual need and ability to pay, earning capacities, standard of living during the marriage, parental responsibilities, assets and other financial circumstances.
This becomes important as year-end approaches and bonuses, commissions, or other forms of compensation may become relevant.
How much does your family spend every month?
Many people know approximately what their mortgage or rent costs but may not have a complete picture of expenses such as groceries, utilities, insurance, transportation, children’s activities, vacations, entertainment, medical expenses, clothing and household maintenance.
Start reviewing several months of bank and credit card statements to develop a realistic picture of your family’s spending.
This information can become important during a New Jersey divorce. The New Jersey Family Part Case Information Statement, commonly called a CIS, requires detailed information about income, assets, liabilities and household expenses. The Judiciary’s instructions specifically emphasize accuracy and advise that expenses should be based on actual expenditures reflected in records such as bank and credit card statements.
Retirement assets can represent a significant portion of a family’s wealth.
Locate the most recent statements for pensions, 401(k)s, 403(b)s, IRAs and other retirement benefits. If possible, locate statements showing balances around the time of your marriage as well.
Do not assume that an account is automatically excluded from consideration simply because only one spouse’s name appears on it. How and when an asset was acquired can matter in determining whether and to what extent it may be subject to equitable distribution.
If you are contemplating living independently, understanding your credit position can be valuable.
Consider reviewing your credit report and identifying accounts in your name, accounts held jointly, outstanding balances and available credit.
This is also an opportunity to make sure that you recognize the accounts appearing on your report and that your personal information is accurate.
The final months of the year can bring tax issues into sharper focus.
Depending upon your circumstances and the timing of a divorce, questions may arise involving filing status, estimated taxes, dependency-related tax issues, investment gains or losses, property transfers, and the tax implications of a proposed settlement.
Divorce attorneys and qualified tax professionals can work together when tax considerations are significant. Avoid making major tax or financial decisions based solely on assumptions about how a future divorce will be resolved.
Take inventory of the insurance coverage currently available to you and your family, including:
If you currently receive health insurance through your spouse’s employment, for example, understanding what coverage may be available following a divorce can help you anticipate future expenses.
Today, much of a family’s financial life exists online.
Banking, investments, credit cards, payment services, cryptocurrency, rewards programs and financial documents may all be managed electronically.
Make sure you understand what accounts exist and preserve financial records to which you are lawfully entitled to access. You should not attempt to access a spouse’s private account without authorization or use passwords or credentials you are not entitled to use.
Considering divorce does not mean you need to rush into filing.
A financial checkup is about gaining information. Understanding your household’s income, expenses, assets and liabilities can help you evaluate what life during and after divorce might look like and prepare you to ask more informed questions. Knowledge is power!
New Jersey’s divorce laws address financial issues including equitable distribution, alimony and child support, but the outcome depends on the facts and circumstances of each family. There is no single financial strategy that is appropriate for every divorce.
As we say in our Lawrence Law commercial, there is never a “right” time for divorce. But there is a right time to understand your options. If you are considering divorce this fall, the attorneys at Lawrence Law can help you understand your rights, obligations and the financial considerations that may affect your future.
Lawrence Law is here to help. Contact Lawrence Law Divorce & Family Lawyers, 908-645-1000 to schedule a consultation with one of our family law attorneys today! Subscribe to our quarterly newsletter, the Lawrence Ledger, for family law insights, firm updates, upcoming events, and more.
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