Tips for Financially Preparing for a Divorce

When you believe it’s time to divorce, it can be helpful to take steps before you discuss it with your spouse to protect your financial interests. It’s smart to familiarize yourself with California law and gather specific documents to give you a better understanding of your marital worth. You may also choose to consult with our Sherman Oaks divorce attorneys at Diarian & Bociaga for tips for financially preparing for a divorce in California. 

1. Collect, Copy, and Preserve Financial Documents

Your first step is to gather documents showing your financial picture for the previous 3 years. Collect the following and make copies (digital and physical) of each:

• Pay stubs, W2s, and 1099s
• Tax returns
• Banking statements
• Retirement plan statements
• Credit card, car loan, and other debt statements
• Mortgage records
• Insurance policies
• Vehicle titles
• Credit reports
• Business records (if you own a business together)
• Records of investments, digital currencies, and other assets

Put copies in a safe location, such as a safe deposit box or with a trusted friend. Keep additional copies to share with your divorce attorney when the time comes. When it’s time to share financial information with one another, your attorney can collaborate with a forensic accountant to determine whether your spouse is hiding assets, which could benefit your case. 

2. Establish Your Own Finances

Open separate checking and savings accounts in your name only to manage your money once the divorce process begins. Review joint accounts you have, including debts and credit cards, and close them if you can to reduce your liability obligations. 

3. Review California’s Community Property Law

Under California’s Family Code Section 760, any property obtained during a marriage is considered marital property and will be divided 50/50 in a divorce. You need to assess each item you and your spouse own to determine whether it is marital or could be considered separate.

Separate property items are those you can take with you from the divorce since they were never community property. Examples include:

• Businesses: If you started it before marriage and your spouse never owned it, you may be able to claim it as separate. However, if they contributed in any way, they may be able to claim the business and its profits as marital property.
• Inheritance, gifts, or lottery winnings: Anything given to you in your name only, whether before or after your marriage, is separate property provided you do not put your spouse’s name on it or pay maintenance for it from joint funds.
• Debts or assets acquired before marriage: If you brought it into the marriage, you generally can take it out as separate property. Again, if you paid taxes, insurance, or other maintenance from a joint account, your spouse may argue that it’s community property. 

To prove an asset is separate and not subject to division, you’ll need to provide documents showing that you have always kept it titled in your name only. You’ll also need to show that you have never used joint funds to pay for it.

4. Avoid Discussing Your Divorce With Too Many People

Although you’ll want to talk about what’s happening with friends, it’s smarter to keep things to yourself when possible. You should definitely avoid talking about your divorce on social media, which can work against you if your case ends up in a bitter trial. 

Stick to discussing the process with your divorce lawyer and financial advisor. If you need experienced and compassionate guidance, schedule a confidential consultation with a Sherman Oaks divorce attorney at Diarian & Bociaga today.