Financial conversations couples should have before deciding to separate
Couples who plan to separate should address issues of income, payments, debts, assets, taxes, and living expenses. Planning should include payment arrangements and gathering account information. Knowing the answers now will save future problems and unexpected bills.
As per the latest data by the CDC, there were 672,502 divorces in 2023 in 45 states and Washington, D.C. Each situation involves serious financial decisions.
These conversations may seem cold in an emotionally charged period. However, careful financial planning for separation helps the parties better understand their financial future.
Start With a Financial Review Before a Separation
Every individual should have a couple’s financial checklist of what the family owns and owes:
- Collect statements for bank accounts and retirement accounts
- Include mortgage documents and credit card bills
- Provide pay slips and household expenses
Money discussions for couples become harder if one partner keeps all the information about the family finances. If ownership or legal rights are unclear, trusted family law attorneys in Woodstock, GA can explain how state law may affect the choices ahead.
Plan for Payment of Current Bills
Couples must have a clear plan for payment of mortgage or rent. The plan should include utilities and insurance payments. The agreement should list the payment amounts and dates.
Never think that separation eliminates the responsibility for joint payments. Late payment for such obligations may negatively affect both individuals. Make copies of payments and review the plan monthly.
Make Agreements on Joint Accounts and Credit
Discuss the amount of money necessary for everyday expenses. Also, decide whether joint bank accounts will be closed. The federal banking guidance says a spouse usually cannot be removed from a joint checking account without consent.
Provide a list of all joint credit cards and loans. See whose name is on the documents because sometimes a person is just an authorized user. Never drain or close any account until getting proper financial consultation before separation.
Talk About Home and Basic Needs
Discuss who may live in the house and perform maintenance work. Estimate the cost of maintaining two homes before making any promise about the payment amount.
Include childcare and transportation in the budget. Communicating finances in marriage also means discussing expenditures that may be easily overlooked.
Plan for Taxes and Future Payments
One’s tax status depends in part on his or her marital status at the end of the year. As per the current guidance of the IRS, individuals who are separated, but not legally separated or divorced, are considered to be married for filing purposes.
It is important to discuss who will claim child custody and if tax withholding needs to be changed. Couples should also review the beneficiaries of life insurance and retirement plans. A tax consultant can compare the consequences of filing in order to avoid unpleasant surprises.
Use Clear Numbers to Ensure the Next Stage of Life
Communicating finances in marriage cannot solve all legal issues. However, it helps identify missing documents and check whether the proposed financial plan is realistic. Write down the agreement and do not sign anything without getting professional pre-separation financial advice.
Professional separation planning replaces assumptions with facts and provides a steady starting point for the next stage of life. Visit more of our site to get other useful tips about facing significant life events.
