Getting Your Financial House in Order During a Divorce

Most people get married and believe it will last until death. Yet, with almost half of American marriages ending in divorce, we have to accept that marriages often end. While there are many painful and devastating effects of divorce, one of the most devastating is the havoc divorce can cause on one's finances.

Unless a couple has a prenuptial or postnuptial agreement, it is most likely that their financial assets, investments and property have been commingled and need to be divided. During the divorce proceedings, a few financial matters should be reviewed and considered:

  • Income levels of each spouse. This is important to determine any spousal support and/or child support, if relevant.

  • All debt including credit card debts, mortgages, taxes and any outstanding loans. The parties need to decide whom the debt belongs to, how it may be divided and how it needs to be paid off. In regards to the mortgage, if either party decides to stay in the family home, then he or she will likely have to buy out the other spouse. If neither party wants to stay in the home, then they may sell the home and divide the proceeds, if any.

  • Health Insurance. If spouses were both covered under one spouse's plan, the other spouse may be eligible for coverage under federal COBRA laws. In any event, there should be a discussion of how to pay for any past medical bills and who will stay on the spouse's health insurance, including any minor children.

  • Wills/Estate planning. Each spouse will need to make new wills and change the beneficiaries of their wills and any other estate planning document.

  • Financial accounts, Insurance and Investments: Presumably, spouses will divide these assets during the divorce. Each joint account should be closed and each person should open separate accounts. An ex-spouse may still be entitled to benefit or proceeds of investment and retirement accounts.

In addition to the above, newly divorced individuals should obtain at least one new credit card, to establish credit in their own names, and get a copy of their credit reports.

People getting a divorce will be dealing with a myriad of issues in addition to trying to move forward in life. Understanding and organizing one's financial matters should be one less thing to worry about. If you are considering a divorce, contact an experienced attorney who can advise you on the best way to proceed.

  • Illinois State Bar Association
  • Northwest Suburban Bar Association

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10.0Donald J Cosley
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Cosley Law Office
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At the Law Offices of Donald J. Cosley, we represent clients in Illinois, including the cities of Rolling Meadows, Schaumburg, Palatine, Arlington Heights, Mount Prospect, Buffalo Grove, Barrington, Elk Grove Village, Inverness, Wheeling, Long Grove and Mundelein, as well as Cook County, Lake County, DuPage County and throughout the Chicago, IL, metropolitan area.

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