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Separating Your Funds: Financial Advice for When You're Facing Divorce

May 10, 2018 - Posted by: Rocky Mountain Credit Union


It may be the last detail you want to deal with but, try to think about your finances as one of the most important details for your long term survival. Where are you in the separation/divorce process? Are you just thinking about separating and haven’t discussed this with your spouse? Just separated? Or further along in the process of dividing assets? These tips could make sure you’re not missing any details.

First understand the laws in your state. Montana is an “equitable distribution” state. Montana also recognizes the value contributed by a non-working spouse. This means that property acquired during the marriage will be divided in a reasonable way.  Reasonable does not always mean a 50/50 split. Some circumstances that are considered include the length of the marriage; the marketable employment skills of the stay at home spouse, physical and/or mental health of the spouse, age(s) of any children involved, etc.  If a couple cannot agree on division of their assets the courts will do it for you.  

Freezing marital assets

An informal separation is different from a legal separation. No legal protections are provided for either person in an informal separation. This means that if one person is spending money from your joint savings account you will have no legal recourse to recover that money. If one person is running up charges on a credit card that is in the name of both people, then both people are still responsible for paying the balance.

A formal separation often involves a freezing of assets. Whether this is an automatic freezing or court ordered depends on the jurisdiction where you live and are filing the separation. Find out the law for your jurisdiction often this is by county.

A financial restraining order prevents both spouses/partners from taking any action outside of their normal business. Some of the common activities that are frozen are the inability to remove or add the spouses name to credit cards, mortgages, retirement accounts, life insurance policies, etc.  Any new buying, selling, or borrowing against property or other assets is not allowed. Hiding or destroying assets and any drawing down of checking or savings accounts is also prohibited. 

Where to start

It will take a while to separate all that you have been sharing as a couple but you need to start by having a few of the basics independent from the other person. Set up checking and savings accounts in your name only. If your paycheck is being automatically deposited to a joint account this needs to be stopped and the deposit redirected to your account. Establish a credit card account that is in your name only.

Organize that paperwork

If possible have statements that cover the past year. If some statements are missing and you have to call to have them sent or downloaded do so, do not overlook this step. Not only do you want to accurately reconstruct expenses and the way money has been spent, you also want to thoroughly understand and be able to track assets.

  • Examine your mortgage statement. Does your mortgage payment include insurance and property tax? If not, track down records for those expenses.
  • Credit card statements for the past year should include the entire statement showing itemization of purchases.
  • Utilities statements from the last 12 months should cover electric, gas, internet, cell phones, and water. Don’t forget sewage and trash pick-up often billed quarterly.
  • Separate groceries from prescription and other medication expenses. Further itemize medications per individual.
  • Checking account(s) detailed statements. This includes joint and individual checking account statements.
  • Detailed medical statements from the past year for yourself and your kids. Separate these according to person.
  • Statements that involve assets, savings accounts, retirement account statements such as 401(k), IRA and educational savings accounts.
  • Registrations of vehicles and titles to anything owned such as cars, RVs, motorcycles, etc.

Make two copies of everything. Once this is done organize the papers into two separate files/ folders. Within the folders paperclip according to topic. Checking account statements, start date to end date clipped together, 401(k) statements start date to end date clipped together, etc. until you have covered all subject areas. Both folders should be organized in the same order and contain exactly the same information.

Benefits to being organized

One of these folders is for you to keep and the other is for your lawyer. This dual construction will save you time and money. When you both have the same information communication is more efficient and you reduce the likelihood of misunderstandings. Lawyers charge for every minute they talk to you whether in person or on the phone. They charge if you are sending email back and forth. They also charge for everything they copy even if their paralegal or assistant is doing the copying.

If you have to discuss a certain line item purchase on a credit card statement, the well-baby checkup from 10 months ago or why the current savings account balance is different than last month’s statement you will both be looking at the same document.

Following the above recommendations will seem overwhelming but you will learn invaluable information during the process. Some of the benefits include a thorough understanding of the monthly inflow and outflow. You will begin to notice areas of waste and what can be cut back. A realization of what a new budget for you will need to include. This recent review will also mean that facts, numbers, and where they are located is fresh in your mind.


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