It’s almost the New Year, and if you’re planning to file for divorce at some point in the near future, you aren’t alone. According to research, January kicks off what some call “divorce season,” a three-month span when we start to see a spike in the number of couples filing for divorce.
There are many reasons couples wait until the New Year to split — everything from wanting to avoid a divorce during the holidays to the added tension of the season, which can contribute to arguments that might tip the scales toward ending things.
“During the holiday season, people often prefer not to disrupt their family life or introduce turmoil, especially when it involves informing their children about an impending divorce or making such plans for themselves,” says Dr. Jane Greer, a marriage and family therapist and author of the book Am I Lying to Myself? How To Overcome Denial and See the Truth. “Once the holiday season concludes, there’s a collective sigh of relief, and individuals are more prepared to embrace change and embark on a new path,” Greer explains.
If you’re at a point where you’re thinking divorce seems like the only option, Dr. Greer recommends having an open conversation with your partner about your feelings and then, if they’re open to it, seeking counseling. “On the other hand, if you’ve already pursued marriage counseling and find yourself still experiencing unhappiness, disappointment, and a sense of emptiness, then it may be time to take the next step and initiate divorce proceedings, signaling your readiness to move forward with your decision to end the marriage,” says Greer.
The First (Financial) Step You Should Take
Not only can divorce be mentally and emotionally challenging, but it also presents financial hurdles. Experts say one of the first steps those planning to file for divorce should take is to complete an Inventory of all their assets, including investments, retirement accounts, property, savings accounts, emergency funds, and any others.
You’ll also want to review any liabilities, such as credit card debt, car loans, mortgages, or personal lines of credit. Lastly, to get a full picture of your financial situation, you should take a hard look at your tax return. “So many times I know one of the spouses just signs off on the tax returns,” says Sylvia N. Guinan, a Certified Divorce Financial Analyst and senior private client financial advisor with Wells Fargo Advisors. “Now, you’ll need to take a deeper dive into the tax documents because they will disclose a lot of information as well.”
Getting financial information can be more difficult if you’re a spouse who hasn’t been intimately involved in day-to-day money management. That’s why Guinan advises all couples — whether they’re thinking about divorce or not — to discuss their finances regularly. “Many times, each of the spouses is doing their roles–one spouse is earning money, one of the spouses is running the household…the conversation doesn’t come up for years and then, particularly if the conversation is leading into a divorce, it’s very difficult to get the information,” says Guinan. “We try to encourage clients who are happily married to have conversations earlier on about finances.”
Getting By With A Little Help From The Experts
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If you’re thinking about hiring a CDFA to help you through the process, there are qualities you should be on the lookout for. For many, divorce is a private matter; your CDFA will be someone you feel comfortable talking with and who is able to ask all your questions. “Unfortunately, sometimes, there’s a lot of shame about not understanding the finances,” says Guinan. “There are experts who will speak at you, and there are speakers who are going to educate you. You ideally want somebody who is going to be mindful about educating you about what’s going on.”
Your Post-Divorce Homework
After you file for divorce and everything is finalized, there are a number of financial-related actions Guinan says you’ll need to take, including:
- Close and change names on all joint accounts (you’ll also want to make sure all your credit card bills and loans are closed by you or your spouse if responsible)
- Change your name on all bank statements
- Double-check your investment accounts to ensure ownership of any stocks, bonds or mutual funds is accurately listed
- Open a checking/savings account in your name
- Set up a liquid account with up to 3 to 6 months of cost-of-living expenses in a money market fund or a Certificate of Deposit (CD)
- Change your beneficiaries on all life insurance policies, retirement and/or pension accounts
- Establish your own credit history by opening a credit card in your name
- Review your tax withholding amounts to see if any changes need to be made
Guinan adds that as you go through the divorce process, you’ll want to make sure you’re addressing other important documents that need to be updated, including your will, health care proxy and power of attorney, among others.
The Bottom Line
If you’ve gone through divorce, you know it’s a huge life transition. While it can be incredibly challenging, if you take steps to prepare and let yourself lean into the change, for many, it can actually be a path to a better you.
“Anything in life that we go through that’s painful and difficult and messy, that’s really our opportunity to grow,” says Guinan. “That’s where the beauty and the growth can come from if you choose to look at it that way.”
