Filing for a divorce (or receiving a notice a party has filed for divorce) can be a daunting moment. Not only is divorce a complex and intimidating legal process, it can also have emotional and financial consequences for all parties.
The process to begin a divorce can be challenging therefore, Simple Texas Divorce would like to provide you with a 2020 Divorce Checklist. We will cover some steps you should take or be thinking about as you begin to prepare for your divorce. We will also discuss some tips to help you avoid any common divorce issues. These steps will also allow you to determine if the Simple Texas Divorce program is right for you.
Before we get started, it is worth noting that every divorce is unique. The tips we mention today will be applicable to some divorces, but you should always meet with an experienced family lawyer prior to filing for divorce. Without further ado, let us begin!
Collect (and Protect) Important Documents
At the beginning of the divorce, you will need to collect personal identifying information. These are items such as both parties’ Social Security numbers, children’s passports, driver's license, email address, physical address, phone number, and the like. Some of the identifying information mentioned above will need to be provided to your attorney as well as the court. It is also important to start collecting documents for your bills and expenses.
After a certain point, you will engage in the asset and debt discussion. It is important to collect items such as Real Property Deeds, car titles, retirement plan statements, and banking information. Once you and your spouse begin to discuss the division of assets and liabilities it is helpful if you can create a list of what assets and debts you own either jointly or separately. Separate Property means property obtained prior to marriage or property acquired by gift, devise or decent. Separate property typically includes things you may have inherited or things you may have received as a gift from your spouse or from a family member during or prior to your marriage. Many people believe because an account is separate or a debt is separate that this is their separate property but this is not the case in Texas.
Community property is all property acquired during the marriage that is not separate. For example, if you and your spouse purchased a home during your marriage this would be considered community property subject to division. The same can be said for bank accounts, retirement accounts, etc.
You should make copies of all documents related to any separate or community property, including bank statements for joint accounts, retirement accounts, deeds, tax returns, proof of ownership for vehicles, etc. It is very important for all assets and liabilities to be accounted for as part of your divorce. If this is not accounted for as part of your divorce, you could have undivided property post-divorce subject to future division.
If you can, hire a certified public account (CPA) or similar financial professional to help guide whether the division of certain assets would have negative tax consequence. Knowing the true value of assets ahead of time can help you and your spouse reach an equitable agreement, such as whether to divide a retirement account or sell the marital home. For example, if you divide a certain type of retirement account your spouse may be subject to a higher tax penalty. It is best to meet with someone who specializes in taxes prior to dividing assets with a significant value.
Lastly, compile your and your spouse’s financial documents. Paychecks, proof of employment, information for any benefit you receive as a result of your employment, investment, and insurance accounts. These documents can also help post-divorce for the transfer process if one party is receiving a benefit on behalf of the other party. If you are thinking "that’s a mountain of information to dig through," you are not wrong. Your attorney may need you to gather even more information as your case progresses.
Even if you cannot collect all this information now, doing as much as you can (and keeping it in a safe location like a safety deposit box or a safe in your home) will go a long way towards reducing the stress of the divorce and making this process less time-consuming. Getting a head start on gathering your financial information also allows you to think about what you may want to gain or lose from your divorce.
Consider Alternative Dispute Resolution
Many divorces start off contested—that is, with the parties disagreeing on at least one aspect of the divorce. However, most divorces are settled out of court.
Why? Simply put, leaving the division of assets and liabilities or decisions concerning your children in a Judge’s hands can be difficult to think about. It removes your and your spouse’s decision making ability and allows someone who just met you to decide your financial and possible child’s outcome in an hour or less.
You may want to consider using a form of alternative dispute resolution (ADR) to resolve your divorce.
Some common methods of ADR include:
- Mediation. A mediator works with both parties over a day (or possibly shorter) to arrange an agreement. It is important to note a Mediator cannot give you legal advice but only assist the parties with reaching an agreement. Mediation tends to be incredibly cost-effective and is a great option for those who wish to settle their case outside of Court.
- Collaborative divorce. In a collaborative divorce, both parties hire an attorney and possibly other professional(s). The attorneys then work with the parties, professionals, and each other to arrange a mutually beneficial resolution for the divorce over several sessions. Collaborative divorce is more costly than Mediation. Collaborative divorce can be a great option but it is best to meet with an attorney to discuss if this is the right fit for you and your spouse.
Using ADR to resolve a divorce often results in both parties leaving the process happier and with less ill-will toward one another. Certain types of ADR also tend to be more cost-effective than a contested hearing.
Plan for the Long-Term
Ultimately, when thinking of your divorce you should also be thinking of what your life looks like post-divorce. Some people go from two incomes to one income and that is a big change when allocating monthly expenses.
In addition, if you are set to gain an asset or a debt, have you thought about the consequences? For example, taxes. If you keep the house, are you prepared to pay estate taxes by yourself? If you sell it, will you be subject to capital gains? If you are taking over a house payment can you make the payment and any bills associated with that home?
Budgeting your finances accurately is essential if you are starting over. Are you prepared for a down payment on a new house? What about a new vehicle? What about your joint credit card?
Determining what you may need in the long-term can help you make those difficult decisions in your divorce such as child support, asset division, spousal maintenance, etc.
You should meet with your lawyer and possibly an accountant or financial planner to discuss your financial goals post-divorce. It is best to think of what your life looks like one year, five years, and maybe even ten years post-divorce. You should keep the goals you set out for yourself in the beginning throughout your divorce and remember your bottom line.
Think About How COVID-19 Affects Your Divorce
It's no secret that COVID-19 has impacted the United States tremendously. Over 40 million Americans have lost their jobs. The economy is suffering amongst many other things. Unfortunately, this pandemic can also impact your divorce.
Budget more time than you normally would for finding a new house or apartment post-divorce. If you plan on selling the marital home, keep in mind that COVID-19 may impact the real estate market in your area.
You should also be prepared that this may affect your divorce in other ways. You may need to attend Court hearings or negotiations remotely. You might also have to take extra safety precautions when dividing assets or finding a new place to live.
Ask your lawyer how the pandemic may affect your divorce. Consulting a financial professional who focuses on economic trends, like an investment specialist, might also help you understand how COVID-19 will impact your divorce financially.
Divorce is never easy but we are here to make the process as “simple” as the name suggests. Planning for your divorce by utilizing the above steps can make the process less stressful and enable you to navigate the process with more confidence.
To arrange a consultation with an experienced divorce lawyer, contact our office online or via phone at (940) 236-0972.