Safeguarding Your Money in a Hostile Divorce


Money concerns can be hard to deal with at the best of times. In the military divorce is commonplace, and money issues abound. If you suspect that your divorce will be a knock-down, drag-out fight, or if you're certain that your divorce won't go smoothly, prepare to take the following steps prior to the start of your divorce. Protecting yourself from financial harm and having ready access to the financial resources you may need during your divorce is important.

Tip # 1 - Open accounts in your own name

If you share a savings account with your spouse, withdraw only some of the money in the account -- maybe half, depending on your needs and the amount in the account -- and deposit it in a new account in your own name at a different bank. Open your own checking account in the same way.

Warning - If you haven't informed your spouse of this financial move, after he or she learns about it, expect some fireworks that'll make your divorce agreement negotiations more difficult. If you withdraw an unreasonable amount of money (and just what constitutes an "unreasonable" amount is something your attorneys have to decide), you may end up getting less in your property settlement.

Tip # 2 - Beware of too little cash in checking accounts.

In the electronic banking era many people no longer balance their checkbooks or reconcile their bank accounts. In a divorce you must beware of leaving too little in your checking account and being unable to cover your monthly expenses. This is especially true if the checking account you share with your spouse usually contains just enough funds to pay the monthly bills. Bounced check charges and angry creditors are the last things you need right now!

Tip #3 - Close your joint accounts

Close any joint credit card accounts you have with your spouse. Also, if you and your spouse have a line of credit with a bank or credit card, cancel or reduce it. Be sure to inform your spouse of what you have done. If you can't close a joint account because of an outstanding debt that cannot be paid off immediately, write the creditor to explain that you won't be responsible for any additional debts on that account beyond the current outstanding balance.

Tip # 4 - Get your own individual credit

As is true with your house, the question to ask about your car is whether it is worth less than you owe on it. You'll have to make your car payments if you want to keep it. And even if you decide to surrender the vehicle, your problem may not be cured. Most car dealers sell surrendered vehicles at wholesale prices, leaving you liable for any balance due on the loan. Try selling the vehicle yourself to raise enough to pay the loan in full and satisfy the entire obligation. If that doesn't work try getting someone to "lease to own" by taking over payments for a period of time or for the balance of the loan.

Tip # 5 - Stash your important personal property

If you're concerned that your spouse may try to damage, destroy, or steal any of your personal property in anger or out of a desire for revenge, find a safe place to hide your valuables. That can be a safe-deposit box in your name, the home of a trusted friend or family member, your office file cabinet, or any other place where your spouse can't access it. Remember, if your spouse steals or damages your personal property, you may be able to sue your spouse for theft or destruction of property. Your attorney can use evidence of your spouse's destructive behavior as leverage during your divorce negotiations or divorce trial.

Tip # 6 - Protect your mutual assets

If your spouse is angry about your divorce or wants to get revenge, he or she may try to use up your joint assets rather than allow you to get a portion of those assets in your divorce. If you're concerned that your spouse may attempt this, consult a family law attorney right away about what steps you can take to safeguard your joint assets. For example, the attorney will probably advise you to avoid maintaining large cash balances in your joint checking accounts or will file a temporary restraining order and request an emergency hearing regarding the property in question.

Warning:  By consulting and acting in association with an attorney you protect yourself. Your actions in a divorce -- like those mentioned above -- will be under scrutiny. Acting in a reasonable and lawful way will always prove to be in your best interest.

Tip # 7 - Identify sources of cash

Many military members use lack of discretionary funds as a reason for not hiring an attorney in a divorce. But a lawyer allows you to act under instruction and in a way that protects yourself, other family members, and assets. Protecting your legal rights when you're involved in a hostile divorce takes money, and lots of it. So, if you anticipate that your divorce will be hostile, start identifying the financial resources you have at your disposal right now. Those resources may include your separate property (such as your savings account, stocks, bonds, or mutual funds), borrowing against your retirement fund, getting a second mortgage on real estate, borrowing money from family members, and anything else along those lines.

Warning - Talk with a CPA or your financial advisor about the tax consequences and other implications of selling stocks or mutual funds, borrowing against the funds in your retirement account, or taking a second loan on the real estate you own.

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