How Not to Lose Everything in Divorce

by Grace Keh
You might need a financial planner to help with your divorce.

You might need a financial planner to help with your divorce.

The Holmes and Rahe Social Readjustment Rating scale measures life's most stressful events; divorce is No. 2 on the list. During such stressful times, it's easy to lose perspective and find yourself unprepared. When filing for divorce, preparation is key to not getting everything taken by your spouse in the divorce proceeding. Losing everything in a divorce is possible if you do not take the steps needed to protect your assets. Following a certain protocol will help to ensure that you retain what is yours and divorce without ending up in a dire financial situation.

Retain an Attorney

Hiring the best divorce attorney that you can afford is the most crucial step in protecting your assets. Ask your attorney friends for referrals; ask friends who have divorced for recommendations or warnings. Interview as many reputable attorneys as you can, and retain one as soon as possible. If possible, retain an attorney before either party has filed for divorce with the court system to prepare yourself.

Separate Information

Separate all personal information from your soon-to-be ex-spouse. Obtain a post office box or another address where your mail will be delivered. Call all creditors and financial institutions and cancel joint accounts, or remove the spouse as an authorized user on your own accounts. If possible, request new cards, as your spouse may have the number. Do the same for all investment accounts, including individual retirement accounts, mutual finds, certificate of deposit accounts and any other financial accounts you may have. Remove your financial information from the household and store in a private location unknown to your spouse. Even if your spouse has moved out, barring a restraining order or court order, he or she has a right to re-enter the house for any reason.

Determine What's Yours

Family heirlooms, inheritances, and assets that were yours before the marriage remain yours during and after the divorce. However, this requires proof in most cases. Find and document each of your own assets, photograph them, and include proof of why and how this item is your own (e.g., grandmother gave it to you as a family heirloom). Calculate how much of the financial assets were from your own family, given to you as a gift solely to you, and how much of your community property is actually and legally your money (e.g., money given to you in an inheritance). Provide this list to your attorney as soon as possible.

Appraise Everything

Hire a forensic accountant to determine the value (and in essence, your portion of that value) of any business that you or your spouse own as community property. Do not use your own accountant; the accountant should be well-versed in providing evidence to a court. Having your own appraiser assess the business establishes what portion of that business, if any, is owed to you. Rest assured, your spouse will be doing the same, and it's imperative to have your own accountant assess the value on your behalf.

Keep All Records

Maintain all business and private records before the divorce proceedings; the courts will require all of these documents in the discovery process of divorce. Do not destroy any messages from your spouse; these can be used as proof in family court. Keep in mind that your spouse will be doing the same and never make threats or divulge intent of any kind in written form; this includes text messages and emails.

Do Not Falsify

While the urge to falsify records to your own benefit may be strong, do not attempt this. If discovered (which is a real possibility in the extensive discovery process), you will merely end up paying your spouse's attorney's fees and costs under Family Code ยง 271 for engaging in conduct not conducive to settlement purposes.

Understand Community Property

In any marriage, much of the assets will be community property, meaning it belongs to both you and your spouse as a result of this marriage. When deciding what to keep for yourself, understand that you will be responsible for each item's "replacement value." The replacement value is different from the "fair market value"; the fair market value of a used $8 book may only be $1, but the replacement value (cost of replacing the item) will most likely be determined as $8. Photograph and document each item that you would like to keep; provide all the items to your attorney.

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