March 23, 2021

Considering Divorce? How to Financially Prepare

While the statistics are difficult to track nationwide, the expectation is that 2021 will see an uptick in the number of people filing for divorce. That makes sense, as the stress of the last year has tested relationships in new ways, and perhaps especially those that were rocky to begin with.

While the beginning of the year usually marks a point when more couples consider divorce – it’s a time for fresh starts and new goals, plus the holidays are in the rearview mirror and a new tax year has just started – a few additional dynamics in 2021 stand out. As unemployment has risen, many families and relationships faced financial hardship. Money and financial disagreements typically rank at the top of the list of factors contributing to divorce. 2020 also brought about a shift in lifestyle and possibly caregiving responsibilities. The pandemic has also led many people to reflect on their lives and given them a chance to reimagine what they want from the future. Regardless of the why behind the timing, if you fit into the category of people considering a divorce, there are some important things you should be thinking about from a financial perspective to make sure you are prepared.

Divorce can bring about a range of different emotions and every situation is uniquely its own. We do not always do well with change, and it can create a sense of concern and anxiety. If you are feeling anxious or concerned, consider taking the following steps to hopefully make the process less stressful.

Get organized

Start by collecting your financial information, including the most recent statements from your bank, credit cards, brokerage accounts, any loans or debt, insurance, your mortgage, pension, Social Security statements, and any other pertinent financial documents. Do you have paper statements? Do you have online access? It is a good idea to securely keep a digital copy of all of your records. If you are struggling with where some accounts or assets are located, reviewing your previous year’s tax return can be helpful. Make sure you have access to all joint account information.

Assemble your team

Build a support team of professionals who will help guide you on your journey through and even past divorce. Having the right people around you can make a big impact.

  • Attorney: You’ll want to talk to an attorney who focuses on family law. Remember that divorce laws are state-specific, so you will want to find a lawyer in your area. This is always a good time to ask for recommendations from other professionals you trust or from others in your network who have had experience with divorce themselves.
  • Financial Advisor: Work with a financial advisor that you know and trust. There are advisors who specialize in divorce financial planning. Check out Find a CDFA® Professional to locate one in your area. The more complex your assets are the more likely a professional with experience in the divorce arena can be helpful.
  • Accountant: A CPA can assist you with tax planning and tax advice. You will certainly want an accountant on your team if you own a business or if there are concerns about moving money or hiding assets.
  • Support System/Therapist: You likely will have friends and family who you will lean on during the divorce process. But it can be refreshing to have someone to talk to outside of your everyday life. Look for resources in your community, such as support groups or a therapist who can help you sort through the emotional impact of divorce in a one-on-one setting.

Understand your current financial state

While you might not have all the answers right now about how assets will shake out after the divorce is finalized, you can at least work with a financial advisor to understand the various potential outcomes and the impact they could have on your financial future. A Certified Divorce Financial Analyst can be particularly helpful. Knowing your financial footing can give you peace of mind, and the more you understand about your current financial state, the more empowered you will be going forward with the divorce. If you haven’t been as involved in the financial decision-making, your advisor can provide a base level of education about what you have and why, as well as help you feel more prepared and confident from a financial standpoint as you move forward with the divorce proceedings.

Keep good records

This is a financial best practice for anyone, but it is especially important for someone going through a divorce. Focus on understanding your cash flow and make sure you are tracking where your money is going. Until everything is finalized, keep thorough financial records and make sure to stay organized!

Pull a copy of your credit report

You’re not alone if you say it has been a while since you pulled a copy of your credit report. However, this is a perfect time to order one and review what debts are showing up. Remember, when you are married in most states you are both liable for that debt. Understand what’s on your credit report, what your score is, and how it may help or hinder you in the future after you are no longer a financial unit with your ex-spouse. It might also be a good idea to put a freeze on your credit file so no new lines of credit can be opened in your name without your knowledge.

Think through your priorities

Most divorces are settled outside of court because this path involves less stress, less cost, and can be quicker. Even so, negotiations must still occur to accomplish the settlement. To help navigate them, take the time to establish your priorities and what is most important to you regarding your finances or your assets. The idea here is that, as the process evolves and negotiations happen, you can regularly reflect back on your priorities. An issue that’s getting you worked up or causing an argument may not necessarily be a battle worth fighting if it isn’t one of your top priorities. If you have decided that you would really like to stay in your current home or covering a certain expense for the kids is a priority, make sure to explore and articulate that. Defining and understanding your priorities can help you overcome obstacles if things get a little messy or downright contentious.

This last piece of counsel is not financial in nature, but it is just as important. Do not forget to take care of yourself. It’s even harder to tackle a list of financial to-do items if you aren’t putting yourself and your wellbeing first. Eat right, drink lots of water, prioritize exercise, and take it a day at a time. Divorce can be an emotional and stressful time. Sorting out your finances on top of everything else can be even more of an annoyance. So get on the right track early, and perhaps the road will be a little less bumpy.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. IRN-21-1802

© 2021 Buckingham Strategic Wealth®

This commentary originally appeared March 23, 2021 on

About the Author

Katie (Keary) Marsden

Wealth Advisor

As a wealth advisor for Buckingham Strategic Wealth, Katie takes pride in helping individuals navigate the challenges of balancing daily expenses with their savings goals, and seeing the impact that it has on their lives is what keeps her coming back for more. She finds joy in collaborating with her team to truly understand how she can help clients in any unique situation; the problems that keep them up at night and the goals that they have set for themselves. Thinking critically to help clients find the solutions to these complex issues is the part of the job that is most rewarding to her.

Stay Connected With Buckingham

Want more resources like this? Click here to receive financial insights, articles, videos and webinar invitations.

Sign Up For Email