Ah, wedding season. Traditionally, summer months have been chosen by couples to exchange nuptials to take advantage of the glorious weather and the golden picture-perfect opportunities summer affords. Couples usually intend for their union to last a lifetime when they marry. However, life sometimes gets in the way; and the reality is, marriages do not always last. For some couples, no amount of marriage counselling is enough to avoid a divorce. In the Jamaican context, divorce rates continue to rise, as 2021 saw a jump, with 4,381 divorces filed in the Court Administration Division – an 18.7 per cent increase over 2020. While divorce is often a difficult and emotionally taxing experience, it is crucial to be financially prepared for the potential challenges that come with the end of a marriage. Among other things, divorce has financial implications oftentimes not planned for, nor contemplated by either party ahead of a marriage. So, if divorce is being contemplated, how should you start preparing financially?

Start tracking your expenditures

Untangling two lives, including finances can be messy. Long before spousal or child support is awarded or your post-divorce budget is in place, you will need to prepare your finances for this new phase of your life. Once divorce becomes inevitable, it is essential to track your household income and expenses. This aids in establishing a post-divorce budget, and it provides vital information for your attorney and the judge when determining asset and debt division, as well as potential spousal or child support. You are in an even better position if you have already been tracking your finances as part of your budget. However, if you have not been tracking your expenses, it is imperative to start doing so immediately. Be sure to include all household bills, food expenses, clothing, entertainment, home maintenance, transportation, childcare, and other expenditures. It is also necessary to consider projecting future expenses. While previous years can serve as a useful guide, keep in mind that circumstances change. For instance, if you have young children, as they grow your expenses will evolve from childcare to tuition and after-school activities. It is therefore crucial to adapt your budget and expense projections accordingly.

Create a budget

After divorce, your income and spending will change because you are going from a double income household to a single income one. In the study, The Economic Consequences of Gray Divorce for Women and Men (2020), both women and men experienced a 50 per cent drop in their wealth post-divorce. By making a budget and examining your individual cash flow, you can gain control over your financial situation. Deduct your expenses from your income sources after the divorce. Remember to factor in any expenses you used to split with your spouse when creating your budget. Identify any significant expenditures, such as car loans and health insurance, from your bank and credit card bills, and include them in your budget so you can adjust accordingly. If you are not able to cover your expenses, try to find ways to cut back on your discretionary spending and/or developing other income sources. When you are on your own, there is nothing worse than waking up one day and realising you do not have the money to cover a sizable expense.

Assess liabilities and assets

A big part of preparing for a divorce is assessing all of your marital assets and liabilities. This should include any assets or debts that were acquired during the marriage, whether they were acquired jointly or by one party. Therefore, if you are contemplating a legal separation, now is the time to document debt, assets, and liabilities. Be sure you have access to documents such as your checking and savings account statements, Retirement account statements and Investment account statements and most critically a list of assets and debts brought into the marriage and those accumulated since marriage.

Change your will and update beneficiaries of your accounts

As you undergo this dramatic life change, you must consider what this means for your will, if you have one, and insurance and pension beneficiaries and trustees, especially if you have minor children. You likely don’t want your ex-partner to inherit your assets, as such you may need to take some time to determine your new beneficiaries and change your will accordingly. If you do not have a will, creating one is also a good idea. Additionally, updating your estate plan is important to prepare for divorce, while protecting your assets. Beyond your will, you likely have accounts that name your spouse as a beneficiary. Some examples are investment accounts, insurance policies and pension plans. You should change the beneficiary designation on these accounts as soon as possible. If the divorce is not yet final, it is wise to consult your legal team before moving forward.

Enlist the services of the experts

A lawyer, your financial advisor, and a therapist should be the top three numbers in your phone as you navigate this season of your life as they can provide invaluable support and guidance. A lawyer specialising in divorce understands the legal intricacies involved and can advocate for your rights, ensuring a fair and equitable settlement. A financial advisor brings expertise in managing finances during and after divorce, helping you make informed decisions to secure your financial future. A therapist offers emotional and mental support, assisting you in navigating the challenging emotional aspects of divorce and promoting overall well-being. Together, this professional team can provide comprehensive assistance, addressing legal, financial, and emotional aspects, and empowering you to make informed choices as you navigate the complexities of divorce.