Prenups, Post-nups and Separation Agreements are used to address finances and other issues concerning marital rights and obligations. As I have written in the past, prenuptial agreements are an opportunity for couples to have comprehensive discussions about each partner’s finances leading up to the wedding. Additionally, prenups provide an opportunity for the couple to navigate the financial path they would like to take during the marriage. Similarly, post-nuptial agreements afford couples the opportunity to have conversations about finances during the marriage. If a couple is contemplating divorce and has not executed a pre or post-nuptial agreement, a Separation Agreement can be negotiated. A Separation Agreement is a very detailed written contract that you and your spouse voluntarily sign without involving the court. It addresses all of the financial and other issues of the marriage.
Often, regardless of income, a divorce impacts both parties’ financial circumstances. One or both parties may have uncertainty as the marital finances. One party may be responsible for marital and/or child support or may find him/herself with less household income than was present during the marriage. In order to reach an appropriate settlement and ensure stability and security post-divorce, it is important to understand the details of household finances, assets and debts prior to divorce.
Each state has its own laws regarding assets for married couples. Your attorney can advise you as to how you and your spouse’s assets will be evaluated upon divorce. Your attorney can also assist you in how to interpret applicable provisions of your pre/post-nuptial agreement if one has been executed. Your attorney or a certified financial planner can assist you in preparing a budget and post-divorce financial plan.
Completing a full statement of net worth allows an attorney to evaluate all expenses and income. This statement provides a useful summary of your financial affairs. It provides a valuable snapshot of income coming into the household as well as how money is spent and how adjustments may be made after the divorce. Most people use their credit card and bank statements to arrive at a monthly average for ongoing personal and household expenses. It is important to be as accurate as possible as this information lays the foundation for discussions about support in that it helps to understand your needs moving forward. Of course, it also provides information on the nature of assets so that negotiations are based on facts. Information on assets includes checking and savings accounts, retirement and investment accounts, business and equity ownership and real property. Compiling this information can be overwhelming and that is where an experienced professional can provide assistance. Having complete financial information facilitates a productive discussion about finances.
Once you have a complete financial picture, an experienced attorney will help you understand and decide:
- What you and your spouse own and owe
- The practical impact of your options
- Options for the distribution of your retirement, investment and business assets
- Options for maintenance and child support
- How best to divide your property, investments and other assets
- How to prepare and negotiate a settlement
Having an accurate picture of income and assets is crucial in dividing assets and determining a manageable financial plan post-divorce. Compiling information prior to the start of negotiations helps alleviate stress and helps to avoid positional bargaining.