When Colorado couples are facing the prospect of divorce, finances can be a significant worry. In a high-asset divorce, having complete and accurate information as to the state of one’s finances is critical. Fortunately, there are things one can do to prepare oneself financially for the end of a marriage and a new life on one’s own. A recent article on an investment website highlighted some things each party should consider.
The first thing to do is to draw up a list of assets and debts – in effect, a statement of net worth. Assets should be divided into two main categories. The first category is marital assets, which generally include those assets either party acquired during the marriage, except those acquired by inheritance or gift. The second category, separate assets, are those assets either party owned before the marriage, or acquired during the marriage by inheritance or gift. In Colorado, marital property is divided equitably between the parties; each spouse retains their own separate property.
Estimating the value of both parties’ pensions or retirement plans is also a good idea, as is figuring out the tax implications of any early withdrawal or surrender. Another important step is creating a monthly expense budget of what one will need to live on after the divorce. This information is critical when the time comes to negotiate asset division and spousal support.
In many marriages one spouse has more information than the other about the couple’s finances; for the spouse who has less information, it is important to come up to speed. Divorce is a stressful experience, but with some preparation one can make the process a lot easier.
Source: Investopedia, “How To Manage Your Finances Through A Divorce,” Leslie Kramer, May 16, 2014