Should I See a Financial Advisor Before Filing for a Divorce? What Sort of Benefits Might That Have for My Case?
If you’re the spouse who doesn’t know much about retirement accounts or the one who hasn’t been as involved in financial planning, then meeting with an advisor to discuss 401(k)s and set up an IRA is probably wise. This will help you to establish a relationship with someone who will help you during the case and also after, once your lawyer’s job is done. Your lawyer will help you prepare your financial disclosure, but your planner will advise you on what to invest in, help you set up accounts for your share of the retirement assets, and act as another calming presence while your divorce is going on and when it’s over. Additionally, a financial planner can help you set up accounts to benefit any children you have and plan for their future.
I Want to Start Building My Financial Future Without My Spouse. Can I Move Funds to Other Accounts or Give Money to Someone Else I Trust Before or During a Divorce?
Yes, you can. When we first meet with a client, that meeting serves as a divorce pre-planning session. We sometimes meet with people multiple times before they ever file to get their financial house in order. Before a divorce is filed, there’s no prohibition on moving money and accounts. However, in Kentucky, the court may implement a tool called a status quo order, which can affect the ability of you or your spouse to move things around after a divorce case is started. We have many clients who go ahead and work on moving their direct deposits so that their spouse can’t take part of their paycheck on the eve of the divorce filing.
Because some spouses set up their own accounts and move a portion of their assets out of savings, we unfortunately have some spouses who weren’t aware they were about to be served and find their accounts depleted. We try to protect those clients who didn’t have time for proper financial planning and ensure they have something to live on as the divorce moves forward.
We often talk to clients during a consultation about what the appropriate amount to move out of accounts might be, and whether this should be half or all varies case by case. After we advise them, a client should follow through on those steps before ever filing for divorce.
It’s a touchier subject to move things in the name of other parties because that is usually a precursor to something called Dissipation of Assets. Judges often consider people moving things in the name of other parties prior to a divorce filing as an indication that they’re trying to take some assets off the table. When we deal with this subject in planning meetings, we advise people to be cautious here. We had a situation where, years before the divorce, the family farm was transferred into the spouse’s name. When they went through a divorce, it was possible to transfer that farm back out simply because it wasn’t that spouse’s property to begin with—it had just been passed on in a family name. It’s possible, therefore, to undo transactions where an asset was put in somebody’s name and put it back in a family member’s or a friend’s name. But if it’s a person’s asset that has always been in their name, we can give our client other suggestions of things they can do with that money or asset that are not going to get them in trouble with the family court judge.
Can I Protect Myself From My Spouse’s Debts That Don’t Have Anything to Do With Me? How Do I Ensure My Spouse Will Help Me Pay Off Debts We Incurred Together?
Kentucky has some pretty favorable laws when it comes to debt. There’s no presumption that parties automatically have to pay half of all debts that may be in both of their names or that accrued during the marriage. Judges will review each debt and, regardless of whose name they’re in, look at who received the benefit of this debt. One example would be a wife whose husband goes on a spending spree with their Best Buy card on the eve of their divorce, buying $10,000 of electronics. The wife’s name is on the card, so she might worry about being on the hook. If, however, she didn’t get any benefit from the purchases—her husband just unilaterally bought that property and intends to keep it—he will also keep the debt. The wife didn’t receive any benefit from the debt, she didn’t authorize the purchases, and they didn’t go to the benefit of the family.
If, however, the parties have children and are paying medical bills for the kids, a judge is more likely to look at that as being something that should be shared versus the unilateral purchases of one spouse or the other. Kentucky courts do a good job of determining responsibility for debt as long as the right evidence is presented.
Another thing a judge looks at is which party has the better ability to pay the debt. If it’s marital debt, that doesn’t mean it’s going to be split fifty-fifty. If you have a husband who makes $100,000 a year while the wife is a stay-at-home mom, the judge might make the husband pay 90 to 100% of any debt accrued during the marriage. The judge has a lot of discretion in that case to say, “Well, even though this appears to be a debt that everybody knew about and agreed to and it was for the benefit of the family, I’m still going to make the higher-earning spouse pay more of that because they have the ability to pay.”
A lot of people come in presuming that they’ll pay all of the debt on a card in their name or 50% of the debt for joint cards. They’re usually reassured to hear that, in the event a case ends up at court, the law takes a detailed look at how each debt actually accrued and who should really be responsible for it.
For more information on Family Law in Kentucky, an initial consultation is your best step. Get the information and legal answers you are seeking by calling (502) 512-0024 today.
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