I am always dismayed when clients come into my practice without having had the benefit of careful divorce planning. Understandably, it is common to ignore the danger signs in a marital relationship. Nobody likes to think that their marriage may be in danger of dissolving. Facing reality and planning ahead, however, can avoid unnecessary stress and legal pitfalls further down the road. The following recommendations are directed towards the secondary or non-wage earning spouse. Simple preparedness can pave the way for a smoother, less litigious divorce as well as enhance the likelihood of a favorable settlement.
Following are some financial planning recommendations which, although no pertinent to every situation, generally have proven helpful to the secondary or non-wage earning spouse.
1. Review all mail which comes into the marital residence and make a list of the sender and the return address. It is particularly important to obtain the addresses of brokerage houses, insurance companies, credit card issuers, banks, etc.
2. Remain “in touch” with the personal finances of the marriage. Review all monthly bank statements and brokerage statements and try to make copies. Give copies of all necessary documents to your attorney to hold for safekeeping.
3. Review all tax returns and seek complete explanations as to any item which may be questioned before signing. Make copies of the tax returns (including any and all schedules).
4. Inventory and periodically review the contents of any safe deposit box. List the contents (including cash and jewelry) and make sure that the safe deposit box is in joint names.
5. Familiarize yourself with your spouse’s business. When tax returns are being prepared, go with your spouse to the accountant so that you don’t get second-hand (filtered) information later.
6. Do not make major purchases (such as a boat or expensive car), or allow your spouse to make major purchases for himself/herself or on your behalf. Keep the assets of your marriage liquid and unencumbered. Don’t purchase that summer home or Mercedes with the thought (hope) that it will patch up the differences between you and your spouse. Patch up the marriage, first, then make purchases later.
7. Do not transfer, assign, alienate or make a gift (even to the children) of any marital asset. Maintain all assets in joint names (or your name alone, if possible).
8. If your spouse has a pension plan with his/her employer, determine when his pension “vests.” It may be important to be married at the time the pension vests to ensure that you will be entitled to your fair share of that asset under Michigan law. Obtain copies of the pension and/or profit-sharing plan and any yearly statements.
9. Obtain copies of any will or trust documents. Go with your spouse to his/her attorney and directly participate in any estate planning.
10. Review and make copies of all loan documents, mortgage applications and financial statements.
11. Do not sign any documents or financial instruments in blank. Know what you are signing, keep copies and don’t rely on your spouse to fill in the blanks later.
12. Have a complete medical and dental check-up. Familiarize yourself with your spouse’s medical and dental plans. Make certain that you have needed medical and dental treatment prior to separation and that you are covered with medical insurance in the event of separation.
13. For purposes of receiving any Social Security benefits to which you may be entitled when your spouse retires, make certain that you are married for at least ten years. Do not separate prior to this time (or at least avoid being divorced prior to this time) if at all possible.
14. Learn where you can cut costs in the event of a separation because of the limitation of income which you may subsequently suffer, at least on a temporary basis.
15. Open your own safe deposit box at another bank (other than where your spouse and you may have an existing box) to store any important papers and valuables. You also may wish to open up a post office box to receive personal letters from your attorney or others.
16. Separation generally causes immediate economic hardship, even if only on a temporary basis. Therefore, put away as much case as you can. You will need to retain an attorney and also will have particular personal needs which your spouse may not want to pay for. Therefore, from weekly monies which you receive from your spouse to buy groceries, allowance or from your job, “separate” as much as you can. Keeping money in travelers checks may be a viable alternative to cash.
17. Make certain your automobile is in good working condition and that it is titled in your name or jointly (not in your spouse’s name alone). You will need to be mobile in order to see your attorney, go to the supermarket, go to work or out with the children.
18. Review and make copies of any and all insurance policies relating to the marital residence, furnishings or other assets, including any riders for jewelry, silverware or other valuables. Make copies of any appraisals which may be available.
19. Don’t create any additional indebtedness and don’t allow your spouse to do so.
20. Develop your own lines of credit. Obtain in your own name gasoline credit cards, credit cards from larger department stores and national credit cards (Visa, American Express, MasterCard, etc.).
21. Keep all inheritances separate from your spouse. If an inheritance is received, don’t place it in joint names.
22. Make certain that all taxes owed to the federal government any other taxing authorities have been paid.
23. If your spouse is about to make a job change or be elevated to another position, don’t leave! Consider the fact that your spouse may have an enhanced earning capacity which could result in greater support for you (and the children) later on.
24. Don’t quit work if you are working. It is important to have a sense of financial independence as well as the emotional security of having a place to go every day.
25. Obtain most recent financial statements given by you and your spouse or your spouse to a lending institution for the purpose of obtaining a loan or line of credit (this usually lists all assets and liabilities).
26. Don’t move out of the marital home!!