Separating Finances When You Are Separating

The following is a guest post by Angie Picardo, a staff writer for NerdWallet, a personal finance website dedicated to helping consumers. If you would like to write an article for Money Q&A, please visit our Guest Posting Guidelines page.

People getting a divorce

Today, it is almost rare to know people who’ve never been divorced. However, just because we are more familiar with divorce does not mean we are well equipped to handle divorce finances. How can those separating separate finances in a healthy, respectful, and responsible way? Here are some key steps to consider.

First of all, keeping emotions from influencing financial decisions is an important first step. Of course, while this may sound like a “duh,” many people know what can happen in the heat of the moment. Think of your future, and if you have children, your children’s future.

Next, begin researching all of the personal and joint financial information you have and can obtain. It is vital to be aware of your situation and not be naive; when things don’t look right, do more research and get answers. Try to be as objective as possible about your financial situation. This will only benefit you later when you need to make decisions, as noted above.

You may decide to keep your joint account if you have children. However, to split a joint account, you will need to call the bank and ask them to close it, with or without your spouse’s consent. Divide the money in half between you and your spouse; if things go awry, you can always give the money back.

To divide assets, you will most likely need to hire a divorce financial planner to help you, as dividing assets is complicated and usually rife with emotion. There are two types of property: separate and marital. Separate property ranges from any property owned before the marriage as well as gifts received prior to the marriage from a third party.

However, the separate property becomes marital property when a spouse is involved, such as remodeling your separately-owned properties and adding your spouse as a co-owner. All other property acquired during a marriage is marital property—all of it.

How marital property gets divided legally depends on what state you reside in. Nine states are the Community Property States, considering each spouse an equal owner with a 50-50 split: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

All other states are the Equitable Distribution States, and dividing assets depends on a variety of factors, including and definitely not limited to: the length of the marriage; the financial situation of each spouse; and the standard of living established during the marriage. The goal here is to have a fair split, which may or not be 50-50.

Last but not least, an important point to consider in separating finances is debt. Debt is handled similarly to assets. If you live in a Community Property State, then debt is split down the middle for both of you to pay, even if it was only your spouse who acquired debt in his or her name during the marriage.

Nevertheless, get your name off the debt your spouse will keep. This will help your credit score and make repayment between the both of you clearer. In the Equitable Distribution States, the same rule of thumb applies as with assets.

Phew! Sounds like a lot to deal with. You bet it is. Hiring a financial divorce planner is a good idea, even if the divorce is mutual and as pleasant as one can be. With a professional and objective third party, you’ll have fewer legal fees and a smoother divorce. Hiring an attorney will be needed when things aren’t so rosy.  is a good online resource to learn more about divorce and the state you reside in, too.

It is no easy financial task for getting divorced. Heck, is any financial task easy, besides spending money? With proper planning, preparation, and open communication, separating finances while separating will not only ease any bumps along the road but support you in a healthy financial future, too, for you and your ex.

Angie Picardo is a staff writer for NerdWallet, a personal finance website dedicated to helping consumers find the best credit cards.

4 thoughts on “Separating Finances When You Are Separating”

  1. What ironic timing; my husband’s best friend was just over for dinner, and he was talking about his impending divorce and what a tough time he and his soon-to-be ex are divvying assets – and he’s a lawyer, to boot! I’m going to forward him your post, I think it could help him.

    • Argh! That’s not very comforting that he is struggling with it too. I guess it goes to show you that we all need help no matter our profession or specialty.

  2. This is just one of the aspects to deal with when taking a divorce and its quite a lot of work already. Hiring a financial divorce planner is really a great idea.

    • I have come to realize that there is a great benefit to hiring people to help you. I’ve been putting off for years to try and hire professionals to help me such as a CPA, book keeper, etc. But, after I start to make mistakes, then I quickly realized that I need help and the money spent on them is well worth it.


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