At some point in the divorce process there will be a settlement or division of assets. No matter how smoothly or cooperatively you think that will go as of now, there will be much more conflict regarding splitting of the marital property.
The actions you take prior to initiating the divorce process, or even discussing it, will ensure that you get what is rightfully yours. There are 6 steps to take before you make known your separation intentions.
- Identify known marital property
- Search for spouses hidden assets
- Document recent financial activity
- Make copies of tax returns and loan documents
- Run an asset search on yourself
- Apply for a joint loan
Even if you are not completely sure about going through with the divorce, taking these steps will make your position more secure whether you go ahead with separation action or not. In many cases simply taking action on these will help make the decision to divorce or not more clear.
Let’s take a look at each of these actions and the purposes of each of them. You can use our free worksheet template (download here) to help with the process.
Identification of marital property.
Start by creating a list of property and assets which are associated with the relationship. Include items owned jointly, and assets owned by each of you individually. If you know the date of acquisition you can write that and an estimated value of the asset next to the listing, but initially just make sure every item you can think of is listed. Keep this list running for days or weeks, and you will remember more items to place on the list. If you know the source of the funds for how the asset was purchased, also enter that into the space provided. If there are payments required to maintain ownership of the asset, list those in the “support” section. Those payments could be loan payments, interest, taxes, insurance, HOA fees, maintenance, etc.
Once you have this step completed, you will have a good picture of what the total value of the marital estate might be, and have it itemized to know which assets have high carrying costs. This knowledge might prevent you from fighting to keep an asset which has great expense to maintain.
Search for spouses hidden assets.
This is an important step to perform well in advance of a divorce. It is easier and cheaper to discover assets of a party when you have cooperative access to that person. You have certain reasons for considering a divorce. It may be due to mistreatment, dishonesty, poor contribution to the marriage, or disrespect of your well being. Those red flag indicators are not only factors to suggest that the relationship is not in your best interest, but also that the person is withholding information about finances or concealing assets. A good asset search performed when the person is not on the defensive may have different results than one performed in the middle of a contentious divorce. By comparing the results of assets before and during a divorce, you will be able to prove that assets were moved and concealed once the action was filed.
Document recent financial activity.
Take a look at the events over the last 12 months and save documentation of any significant financial events in your life. If there were any major purchases, loans, sale of items, or even vacations make copies of receipts, applications, and agreements. The records can come in handy during the divorce. In addition, if you need them for any purpose after a separation is complete you will know that you have the records in your possession and will not need to chase them down from third parties, or your former spouse.
Make copies of tax returns and loan documents.
Regardless of whether the tax filings are joint or individual, gather up returns and schedules going back at least 3 years, 5 preferably. The same holds true for any open loans. What you will be looking for is any over payment of taxes or loan amounts which was done intentionally in order to create a credit which can be retrieved at a later date.
Run an asset search on yourself.
You want be aware of any assets which show in your name, so that you can be sure to be complete in your disclosure if your case goes to court. Even if you leave off a small asset accidentally, it can make it appear that you are acting in bad faith. You may also discover that your spouse had put assets into your name without your knowledge.
Apply for a joint loan.
Find a reason to create a substantial loan application. This can be for pre-approval on a new home, home equity line of credit on your current residence, or even a business loan. The purpose is not necessarily to go through with the financing and creating a debt, but to create a paper trail of signed application by your spouse to document their statement of income and assets. By having them put into writing a formal financial application, you can create a written record of what they are claiming to have and to earn. Along with the application you will obtain actual copies of recent pay stubs. This way you will have collected all of this information during a period of cooperation. Even if the divorce action does not initiate until a later date it is often interesting to compare what the other party claims during a divorce.
Always get good legal and accounting advice for any important process, and coordinate your efforts or professional investigation with any legal assistance you are working with.
At the moment that the community property is divided up by the court, both you and your spouse will not each be getting new assets, you both will be looking at the process as losing the half that the other party is retaining. Those are assets, property, and items which you have developed an ownership attachment to over many years and will be clinging to both emotionally and legally. The actions you take today will make that event more secure and less stressful to you in that moment.
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