Divorce can leave a person stripped off their hard earned wealth. And if you are a man, chances are very high that your ex will easily claim half your assets. As such, you need to start taking immediate measures to protect your finances in case you are facing a divorce. To that end, the following tips will definitely prove useful.
1. Safeguard Financial Data:
The first thing you should do is to secure all your financial data. This includes changing the password of the bank accounts, mutual fund accounts, and any other investment accounts to which your spouse has access. You also need to change the password of your email to which you receive important financial statements that might expose your wealth position. It is also recommended that you have copies of all important financial statements as a backup.
2. Joint Credit Cards:
If you have a joint credit card set up with your spouse, then lock it up immediately. Contact the credit card company and ask them to neglect any future requests from the card. However, they won’t be able to close the card until and unless you clear all the outstanding payments. So, get the necessary money to pay off the credit card debt and shut it down. The longer you keep the card active, the higher the possibility that your spouse might use it for some big purchase. And you alone can end up being responsible for the new debt.
3. Start Building Up Your Credit Score:
It is also advised that you start building up your credit score. Once the divorce is settled, you will likely lose half your wealth. As such, you may require a loan to meet certain obligations. If your credit score is too low in such situations, you will have to pay a higher interest rate for it. And considering that your disposable income will be on the lower side because of alimony payments to the spouse, adding in high-interest debt will only put too much pressure.
4. Freeze Bank Accounts:
Ask the banks to freeze all joint accounts you have with your spouse. This will ensure that the spouse does not take out any large sums of money and rob you of your wealth before the divorce terms have been settled. Now, do keep in mind that you should never empty your bank account since this can easily result in some serious legal issues in the future. And when you need divorce mediation services to deal with your angry spouse, make sure that you hire an experienced lawyer.
5. Tax Considerations:
When splitting up assets, it is important to consider the effect of taxes since you might end up getting less value on certain assets because of it. For example, in case you have a retirement account, it will have to be liquidated and split with the spouse as a divorce settlement. But, once you take money out of the retirement account, taxes will be applied to it. In addition, you might also attract penalties in case the liquidation is not done properly. Such tax considerations need to be carefully considered before deciding which assets to split and which not to. So, be sure to meet up with a tax consultant and work out the best way to split the assets without losing too much money to taxes.
6. Rental Property:
If you and your spouse have been renting a home or apartment, then make sure that you arrange for the rental payments to be made and the agreement to be closed. Since you will be single now, you will likely not need the existing property. Instead, a smaller property with a lower rent will be perfect for you. This will also help you cut down your monthly expenditure, which will be sorely needed since you may be giving up a part of your income to your spouse in the form of alimony.
8. Start Looking For A Better Job:
It is also a good idea to start looking for a higher paying job. If you are ordered to pay alimony to your spouse, maintaining your lifestyle at the current income will almost be impossible. The only way to deal with this is to take up a job with a higher salary. But if you like your current job, then an alternative solution will be to look for part-time work or as a freelancer. This should supply you with the extra cash which is required to maintain your standard of life even after paying for alimony.
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