Notes on when you can take the money you need.
Money problems are part of any divorce. This is true no matter what your financial situation. Cash flow can still be problem when you’re going through lengthy divorce procedures. You’re going to need money for daily expenses and to hire good legal counsel.
Should you prepare yourself by emptying the joint accounts in advance?
This is a tricky question and my advice is the same as usual. Your best course of action is to seek a good attorney who specializes in family law. State laws vary so you need someone who understands your particular situation.
I will give you a few general suggestions.
1. Get all the information you can about ALL your accounts. Know the balances of each account. Find out what bills are debited from each account. You don’t want to empty a bank account and then find out your mortgage automatically debits from that account.
2. In most states it’s better to only take 50% of what is in joint accounts. Wiping out the accounts may cause future problems.
3. Track what you take out and the account you took it from.
4. Be aware that there may be tax consequences if you withdraw money from retirement accounts.
5. Keep a record of where you spend the money. If the court asks for an accounting you can show them you spent the money on living expenses for you and your children. You’ll need a budget of living expenses anyway so this is a good way to track your monthly spending. Cut back on extra spending for the moment.
6. Don’t give in to your need for retail therapy. Spending a huge chunk of money may seem like fun at the time; but you’ll probably regret it later. If you must go shopping; take a set amount of cash and leave the credit cards at home.
7. Some states will put a hold on joint accounts after divorce papers are filed. This is a good reason to pull some money from your accounts before you file. Again, your lawyer can advise you on the laws in your state.
8. If you take out more than 50% then you need to keep the money safe and not spend it all. The court could require you to reimburse some into the account so don’t blow it on a trip to the Bahamas.
9. Taking money out of your accounts is especially important if you’re a stay at home mom without income of your own. You may feel you don’t want to throw the “first punch” in the divorce but you need to protect yourself and your children. You don’t need the stress of worrying about how you’re going to feed your children while the court process drags on and on.
10. Find out what you owe on assets such as your home and vehicles. This will let you know how much equity you have in these items should they need to sold to raise cash.
My final advice is this: Don’t make decisions based on the need to be vindictive. They will usually come back to bite you in the end. A friend of mine decided she’d run up all the credit card balances to teach her soon to be ex husband a lesson about cheating on her. She didn’t realize that a credit card agreement predates a divorce settlement. When her ex didn’t pay off the cards, even though the divorce decree said they were his obligation, the credit card companies came after her. Her credit was shot for years.
Divorce is an emotional time for everyone. This is why seeking counsel from calm, non-emotional professionals is always a good idea.