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How can you break up your finances during a divorce?

On Behalf of | Feb 23, 2022 | Divorce

Illinois married couples going through a divorce have to transition to their single lives. One aspect of decoupling involves breaking up the finances.

Joint bank accounts

If you and your spouse have joint bank accounts, now is the time to separate them. You will want to close them and start fresh by opening accounts in your own name alone. However, if you and your former spouse are not on the best terms, you might have trouble closing joint accounts until after your divorce is settled.

Credit card accounts

Shared credit card accounts should be closed. However, it’s wise to obtain a copy of your credit report to ensure that you’re actually a joint owner instead of just an authorized user first.

If you and your spouse have debt, you might want to contact the creditor and explain the situation. Pay down as much of the debt as you can and close the account. You can then open your own credit card account.

Mortgage

Your home is a tricky thing; if you and your spouse are both listed on the mortgage, it can complicate matters. If you get the home as part of the divorce settlement, you may want to get a new mortgage loan in your name only. Should your spouse get the home, you could still be liable for damages if your name is on the mortgage.

Investment and retirement accounts

It’s challenging to divide investment and retirement accounts as you may not know the exact value of them. There is also a level of risk involved when you take out money prematurely from these accounts. Selling investments might be a better option. For retirement accounts, there are specific rules you must follow when dividing them during a divorce.

Consulting with a financial professional may help when you are going through a divorce and want to protect your finances. It’s important to make a thorough accounting of everything you and your spouse own so that all assets can be divided fairly.