Divorce can affect your property, debt, income, taxes, and long-term financial stability. Before filing, gather accurate financial records, identify your assets and debts, and consider how property division and support could affect your budget. The decisions you make early in the process can have lasting financial consequences.
You may worry about how your assets will be divided, whether you can maintain your current lifestyle, and which financial obligations could arise during and after the divorce. Preparing financially does not mean expecting the worst. It means understanding your current financial position and the issues you may need to address.
At Grabski & Shah, we help you evaluate the financial aspects of divorce and prepare for the decisions ahead. Located in Colorado Springs, Colorado, we serve clients throughout Colorado Springs, El Paso County, and the surrounding areas. If you are considering divorce, contact us today for guidance based on your circumstances.
Take Inventory of Your Assets and Debts
One of the first financial steps to take before filing for divorce is creating a complete picture of your finances. A thorough inventory of what you and your spouse own and owe can help you identify property and debts that may need to be divided.
Gathering financial records early can also prevent important information from being overlooked. Bank statements, tax returns, retirement account statements, loan records, and property deeds can provide valuable information about your household’s financial position.
Your inventory may include:
Bank accounts and cash assets: Include checking and savings accounts, certificates of deposit, money market accounts, and cash.
Real estate: List your primary residence, vacation properties, rental properties, and undeveloped land.
Outstanding debts: Identify mortgages, vehicle loans, credit card balances, personal loans, and other obligations.
Retirement and investment accounts: Include 401(k) plans, IRAs, pensions, brokerage accounts, and other investments.
A complete financial inventory can help you evaluate your options during divorce. Collect records you can lawfully access, and do not hide, transfer, or dispose of assets to keep them from being divided.
Consider Property Division and Marital Assets
Colorado follows an equitable-distribution approach when dividing marital property. This does not necessarily mean an equal division. Instead, the court divides marital property in proportions it considers fair after reviewing the relevant statutory factors.
Before filing, distinguish between marital and separate property. Generally, property acquired during the marriage is presumed to be marital property, regardless of how it is titled, unless a legal exception applies. Separate property may include property acquired before the marriage or received individually by gift or inheritance. However, an increase in the value of separate property during the marriage may be treated as marital property.
Factors that may affect property division include:
Each spouse’s contributions: The court may consider financial and nonfinancial contributions to acquiring marital property, including contributions as a homemaker.
The value of each spouse’s separate property: The amount of separate property retained by each spouse may affect the court’s property-division decision.
Each spouse’s economic circumstances: The court may consider each spouse’s financial circumstances at the time the property division takes effect.
Changes in property value: The court may consider increases or decreases in the value of separate property and the use of separate property for marital purposes.
Understanding these considerations before filing can help you assess possible outcomes and prepare for property-division discussions. We can help you identify property that may require valuation and evaluate how different assets and debts could be addressed in a settlement.
Evaluate Support Obligations and Tax Considerations
Financial planning before divorce should also include reviewing possible child support, spousal maintenance, and tax consequences. These issues can affect your finances during and after the divorce. Depending on your circumstances, child support or spousal maintenance may become part of your case. Estimating these potential obligations or payments can help you develop a more realistic post-divorce budget.
Divorce may also affect your tax filing status, dependency-related tax benefits, retirement accounts, and the tax consequences of selling or transferring property. Issues to evaluate include:
Potential child support: Colorado’s child support calculation generally considers both parents’ incomes, parenting time, work-related childcare expenses, health insurance, extraordinary medical expenses, and other applicable adjustments.
Possible spousal maintenance: The court may consider each spouse’s income, financial resources, reasonable needs, earning capacity, and the length of the marriage.
Tax-related concerns: Changes in filing status, retirement-account divisions, capital gains, and the sale or transfer of property may affect your tax position.
Addressing these issues before filing can help you understand the possible financial effects of divorce. We can explain how Colorado law may apply to support and property matters, while a qualified tax professional can advise you about the tax consequences of specific decisions.
How We Can Help You Prepare Financially for Divorce
Addressing financial issues before filing can help you prepare for decisions involving property, income, debt, and future obligations. Collecting records and assessing your current finances can also help you identify concerns before negotiations or court proceedings begin.
At Grabski & Shah, we work with you to identify marital assets and debts, evaluate potential support issues, and consider options that address your long-term financial needs. Located in Colorado Springs, Colorado, we serve clients throughout Colorado Springs, El Paso County, and the surrounding areas. Contact our firm today to discuss your circumstances and learn how we can help.
