Divorce rearranges your life on every level, from where you live to how you pay your bills. Restructuring your finances can be one of the process’s most confusing and intimidating parts. The choices you make now will lay the foundation for your financial future.
For many divorcing couples, the stress of this process leads to friction and conflict. You might find your interests at odds with your future ex-spouse, scrambling to protect your finances in the divorce.
However, you don’t have to stress. You can take steps to protect yourself financially in a divorce and ensure stability once your marriage ends. The dedicated Minneapolis divorce lawyers at Milavetz Injury Law, P.A., have prepared the following list of 10 things you can do to protect your financial interests.
1. Contact a Divorce Attorney
State law governs the division of assets in a divorce. Minnesota follows the rule of equitable distribution, meaning assets and debts are divided based on what’s fair and just for both parties.
In court, “fair” and “equal” are not synonyms. The judge will consider the needs and resources of each party, including:
- Age and health status
- Occupation
- Income level and sources
- Future access to capital
- Financial and non-financial marital contributions
- Debts or money owed between spouses
The underlying laws are complex and highly detailed. Working with an experienced divorce lawyer who understands the whole picture and can help you present your case most effectively is essential.
Milavetz Injury Law, P.A., has helped many Minnesota residents protect their assets in a divorce. Our skilled and experienced family law attorneys will work with you to understand your situation, needs, and resources. With that information, we’ll develop a plan for navigating the asset division process.
2. Contact a Realtor if You Own Your Home
Family homes are frequent battlegrounds in the asset distribution process. They’re often the most valuable shared asset a couple has, and moving is inconvenient for either party.
Sometimes, one spouse needs to keep living in the house. Parents frequently make this choice to avoid uprooting their children. Logistically, this option might make the most sense, but the couple still needs to work out the financial aspect.
In Minnesota, the default choice is to offer a divorce lien to the departing spouse. A divorce lien is a deed representing a financial interest in the home’s value. If you receive a lien as part of your divorce settlement, you can keep it until your ex-spouse sells the house, or you can sell the note for cash.
The other option is to sell the home and divide the proceeds. This choice can be simpler than a lien but may also come with its own complexities. For example, will either of you live in the house pending the sale, and who will pay the maintenance costs?
We recommend consulting a real estate professional and talking numbers. While our skilled attorneys can help you understand asset division options, realtors are qualified to discuss housing value. A realtor can advise you on your home’s value and whether staying or selling would benefit you financially.
3. Research Assets and Accounts
Understanding what you have is your best defense when you’re concerned about protecting your assets from divorce.
Most people have several types of assets. These may include include art, jewelry, cars, and real estate. Your financial assets may include the following:
- Checking and savings
- Certificates of deposit
- Retirement accounts
- Investment accounts
- Securities
- Interest-bearing insurance policies
You must know everything about these assets when you’re getting a divorce. You need to learn the current balance on each financial account and whose name is on the paperwork. If you have any policies with beneficiaries, you should know who they are.
If you don’t have a financial advisor, now is an excellent time to get one. They can help you understand what you need to protect yourself financially in a divorce, including what accounts you should set up.
More complicated divorces may involve ownership interests in businesses, commercial ventures, intellectual property, and digital assets. Outside experts will be needed to value these assets properly.
4. Document Everything You Can
You need as much financial documentation as possible when going through a divorce. The court depends on accurate records to determine fair and just distribution of assets.
Your lawyer also depends on the financial documents you provide. They’ll use these documents to make your case with the court and offer trustworthy advice. The more they know, the better they can advocate for your needs.
Your role is to gather paperwork for every asset and account, including debts and loans. Those documents may include:
- Account statements
- Loan documents
- Credit card statements
- Recent tax returns
- Property titles
- Insurance policies
- Inherited or pre-marital asset documentation
Collect all of these documents in one place. Then, create a new document to track your financial activity leading up to the divorce. Keep a paper trail of your transactions and record any time you take significant financial action, such as opening a new account or changing the name on an existing account.
5. Change Your Will and Power of Attorney
Reviewing your retirement and end-of-life planning is vital to protecting yourself financially in a divorce. Many couples give each other authority over their respective finances in case they become incapacitated, and it’s easy to forget about those agreements amid a stressful divorce.
Think about who you’ve authorized to make your decisions. In Minnesota, if you become incapacitated, your spouse needs a Health Care Power of Attorney to make decisions about your medical care. If you’ve given them a Durable Power of Attorney for finances, they can handle your personal finances, too.
Updating these directives as soon as possible is essential to protect your finances. Consider who you would want to make your medical and financial decisions if something happens. Anyone can become incapacitated at any time.
Changing your will is essential for the same reasons. If you pass away first, your will might name your spouse as the primary beneficiary, which will stand unless formally altered.
Also, when you create a will as a married couple, you typically focus on shared property. You need a will explaining your wishes for individual property.
6. Figure Out How To Separate Financially From Your Spouse
As a married person, you were part of a two-adult household, likely with shared finances. After your divorce, all of your assets, debts, and income will be solely yours—unless you marry again.
The first step is mentally separating your finances. Consider where your income goes and how you pay bills. If you rely on joint bank accounts, plan to set up your own and prepare to deposit your income there. Ask your divorce attorney about the right time to make that change.
Start thinking about whether you’re financially solvent on your own. If you’ve functioned as a couple for years, you may not know whether you earn more than you spend.
That information is a must-have for your divorce attorney. Minnesota’s equitable distribution laws provide for certain allowances if a divorcing spouse can’t support themselves with marital property and their personal income.
7. Determine Your Living Situation
Your living situation contributes significantly to your financial health, and these circumstances can shift dramatically after a divorce.
Some divorcing spouses need to downsize to afford utilities independently. Others receive spousal support to keep the lights on for their children now that the other parent is no longer living in the family home.
The sooner you know where you’ll live and who will live with you, the better prepared you’ll be to plan your finances. If you need to relocate, start figuring out your budget. Browse potential neighborhoods and homes to learn more about your options.
If your children will live with you, a housing budget will help you understand your child support needs. The experienced family law attorneys at Milavetz Law can explain child custody for Minnesota parents.
8. Protect Personal Heirlooms and Firearms
When protecting your assets from divorce, it’s essential to consider non-financial assets. Minnesota defines marital property as any asset acquired during the marriage, with specific exceptions, such as gifts or inheritance. That category may include important tangible assets you consider as personal possessions.
Family heirlooms are potential exceptions to this rule. Marital property law excludes items received exclusively as a “gift, bequest, devise, or inheritance.” The heirloom will also be personal property if you received it before marriage.
Protect your heirlooms by documenting when and how you received them. If the items came to you in a will or trust, keep those documents along with your other financial paperwork.
Firearms may also be challenging to protect, mainly if you acquire them during a marriage. As marital property, they become part of the asset division process, and disagreements about gun ownership can add layers of complication.
If you own a firearm that you want to keep, familiarize yourself with Minnesota gun laws. Find out whether your spouse could point to any regulation, such as the Extreme Risk Law, to prevent you from keeping the gun. Discussing firearm ownership with your divorce lawyer as soon as possible is essential.
9. Cancel or Remove Yourself From Joint Credit Cards
If you’re concerned that your spouse might damage your finances, either intentionally or unintentionally, it’s important to separate from joint credit cards as soon as possible.
Activity on a joint credit card impacts both cardholders’ credit. If your spouse defaults, makes late payments, or accrues balances close to your limit, your credit score could be at risk. The lower your credit score, the harder it is to secure loans and affordable interest.
Closing a joint credit card may impact your score, depending on the card’s balance and other debt. Consider speaking to a financial advisor and your divorce attorney for the best way to separate from joint debt.
10. Take Care of Yourself Mentally, Emotionally, and Physically
Separating financially from a spouse is draining. It’s important to acknowledge that finances are far from the only aspect of your life you must protect.
When you go through something as stressful as a divorce, the impact on your health can be longer-lasting and, in many ways, more severe than the effects on your finances. Stress can damage all aspects of your physical and emotional well-being, causing illnesses ranging from anxiety and depression to heart disease.
As you work on protecting yourself financially during divorce, remember to protect your mental and physical well-being, too. Get plenty of rest, exercise, eat healthy, and see a therapist to learn coping skills.
Finally, remember to lean on your social support system. Research shows that strong support during and after divorce improves overall well-being.
Get Help Protecting Your Assets From Divorce
No one should navigate divorce alone. At Milavetz Law, we provide skilled and compassionate representation to divorcing spouses in Minneapolis and beyond.
Let us show you how to financially protect yourself in a divorce while guiding you through this challenging time.
Contact us online or call our office at 763-560-0000. The consultation is free.
