Protecting Yourself During a Divorce

When emotions are running high, financial judgment can get cloudy. To help make sure there's a fair distribution of assets on both sides, consider taking the following steps while your divorce is in progress.

Short-term decisions

Depending on the laws of your state, you may want to separate your finances before papers are served. To do this you can:

• Close your joint checking and savings accounts. Check with your attorney and banker about taking out half of the money from a joint account and putting it in your own account.
   
• Ask your attorney about placing the assets from a closed account in an escrow account until your divorce settlement is complete.
   
• Once you have your own line of credit in place, close your old joint credit card accounts. Date the letters and clearly state that you're no longer responsible for new charges. Keep copies of all correspondence.
   
• Freeze assets in all joint brokerage accounts. Immediately notify your investment advisor in writing that you are separated, and ask that no transactions be made without your approval.

Long-term considerations

How your marital assets are divided will have a definite impact on your future financial well-being. As you negotiate your settlement and start planning your future income, be certain to do the following:

• Include pensions, retirement plans, company stock options and other types of deferred compensation in your settlement considerations.
   
• Discuss the tax implications and long-range investment consequences of how you divide your assets with your attorney or advisor.
   
• Factor in Social Security retirement benefits. If you're 62 or older, were married for at least 10 years and haven't remarried, you may be entitled to collect benefits equal to one-half of your ex-spouse's benefits. You must be 62 or older to be eligible, and if you've been working, you can choose between your own benefits or spousal benefits, whichever is greater. Go to SSA.gov for more information.