How to Divide Your Money in Divorce

You are going through the divorce from hell and don't want to get screwed over by your ex. You know you have assets, but you aren't sure where to even start and your ex is coming out swinging.

Who gets the house? Who gets the retirement accounts? Bank accounts? Are you wondering who is on the hook for that credit card debt that looks suspiciously like it was charged up for his mistress? Let me help you figure out how to divide your assets, not be on the hook for debt that isn't yours, and walk away from your divorce better than ever. 

Find Your Accounts

To get started, make a list of all accounts that you know about. This includes accounts you share (joint accounts) as well as accounts that are in only your name or his name. Include bank accounts, credit cards, retirement, and investment accounts. You might not know about all the accounts or you might not know all the information about them, but you should just write down as much as you know.

Run a credit report on yourself to verify the debts that have your name on them. You can't legally run a credit report on your husband without his permission, so don't do that. But make sure you get yours so you have an accurate pictures of all accounts and debts owed.

Community or Separate Property

You may have heard of something called community property and separate property. The laws in your state will determine how the assets you and your husband own will be treated.

Community property refers to all of the income earned, properties acquired, and debts accumulated during your marriage. Both of you have rights to these assets and income.

Separate property is owned by only one spouse. Property might be separate because it was owned before the marriage, inherited by one person, or because you have a prenuptial agreement that specifies this.

Speak with an attorney to understand the laws in your state and how your specific situation will be treated. It is important that you understand which assets you have rights to, and which ones you likely do not have a claim to.

Get a Bank Account and Credit Card

The next most important step is opening a bank account in your name only. The money in this account will be protected because you will be the only person with access to it. You will not have to worry about whether your husband will drain the account or close it when you lease expect it.

You should also get a credit card that is only in your name. This is especially important to do if you don't work outside the home. While you are married, you can use "household income" to apply for the card and qualify for credit. This credit card may be very important during your divorce if you are running low on funds.

Who Gets the House

One of the biggest mistakes I see people make is trying to stay in the family home when they can't afford it. Staying in your home will probably require you to refinance your mortgage if you are both on it. You may also have to buy your spouse out of his or her share of the equity in the house, which can be expensive. Think carefully about whether this is worth it or if it is even possible in your financial situation.

If you are lucky, you may be able to assume the mortgage, which essentially means one person takes over the current mortgage and the other person is removed from it. But not all lenders allow assumption, and you will have to go through some hoops and prove you can afford the mortgage before you're allowed to assume it.

Sometimes the best option is to sell the family home and split the profits from the sale. While it may feel sad to give up the place that your children call home, if it is unaffordable for you to keep the house, it may be necessary.

Dividing the Debts

It is stressful to think about who will be responsible to pay the debts incurred during the marriage. You have to be very careful about the debts that have your name on them. Even if the divorce court judge orders your ex to pay the debts, if your name is on an account and he or she does not make a payment, that will affect your credit. Why? The credit card company or bank doesn't care what your divorce decree says. If your name is on the debt, you are still legally responsible for it.

If possible, have your ex refinance debts to get your name off them. Have him open a new credit card that is only in his name, and do a balance transfer from the account that has your name on it. A home equity loan or personal loan may be options as well. The best way to protect yourself is to get the debts with your name on them paid off, and the accounts closed.

Investment and Retirement Accounts

Do not forget about retirement accounts and investment accounts, and do not give us your rights to these assets without thinking carefully about your entire financial picture. No matter whose name is on those accounts, if money was added to them during the marriage, you most likely have rights to a good portion of those accounts. You want to make sure you get all the assets you're entitled to in the divorce, especially investments and retirement accounts like a 401(k), IRS, or pension.

When You Need Expert Help

Figuring out your finances in a divorce is one of the most daunting tasks of the entire process. You don't have to do it alone! I created a guide to help you get started with understanding your family's finances. Get the most out of your divorce settlement and walk away with zero regrets.