When people hear you’re getting divorced, they tend to start offering unsolicited (and often bad) advice. Your friends and family mean well, but some myths about divorce are so often spoken that we assume they’re true.
Divorce is a challenging time for everyone involved. For most women, it is uncharted territory. When it comes to your future financial well-being, assumptions can be costly. Not to mention, some common myths may land you in legal hot water.
If you are preparing for or in the middle of the divorce process, it’s important to get your facts straight. Here are five common divorce myths that need to be debunked.
Myth #1: Separate Bank Accounts Protect Your Cash
Every marriage handles finances differently. Perhaps you and your spouse have a joint bank account for depositing paychecks and paying bills. Or, you’ve always held separate accounts and divided up the household expenses. Whatever the case may be, both joint and separate bank accounts are considered joint property of the couple if the money was accrued during the marriage.
This means that your spouse cannot keep money from you that resides in an account that doesn’t have your name on it. Both spouses will need to complete a financial affidavit during the divorce proceedings and disclose all assets, including separate accounts. Based on your state’s divorce laws or negotiations, you may be entitled to a portion of the money in those other accounts.
Myth #2: You’re Not Responsible for Your Spouse’s Debt
Let’s say you and your spouse have a joint credit card account. After separating, should you still be responsible for any new debt your spouse incurs on the card? Unfortunately, you could be on the hook for paying it off. Worse yet, if you don’t pay it, your credit score will take a hit just like theirs will.
If you are an authorized user, or your spouse is, call the credit card company as soon as you’re able and have yourself (or your spouse) removed — as long as it doesn’t interfere with any court rulings. Authorized users may not have the same level of responsibility for paying the card’s balance as a joint owner, but they can still make purchases as long as they’re authorized on the account.
If you’re worried your spouse may try to open a new credit card in your name, you can put a freeze on all hard inquiries for your credit report for free. The three major credit bureaus to contact are TransUnion, Equifax, and Experian.
Myth #3: You Won’t Have to Pay Alimony
The myth that women never have to pay alimony is based on outdated stereotypes. Alimony is a recurring payment made from the “supporting spouse” (the person making the most money in the relationship) to the “dependent spouse” (the one who doesn’t earn an income or earns less than their spouse). The court will decide who fits each of these roles, and that decision is not based on a spouse’s gender.
Women are rapidly gaining economic influence. Today, 16% of women are either the sole or primary earner in their household.1 When that’s the case, it’s possible they’ll be named the “supporting spouse” and required to pay alimony (though there are other factors that go into this decision).
Myth #4: It’s Best to Make Big Purchases Before Filing for Divorce
If you plan on filing for divorce or suspect your spouse is about to, you may be tempted to make some big purchases now. In reality, it’s better to hold off on any major purchases because this could get you in trouble (or backfire altogether).
Once either spouse has filed for divorce, the courts typically restrict spending from either party. This is to ensure one spouse won’t drain the couple’s joint accounts before assets can be divided. If they find that you did make a big purchase, like a new car, prior to filing for divorce, they may make you compensate your spouse accordingly. In the worst case scenario, you could be accused of defrauding the other party out of money they’re entitled to.
Myth #5: You Don’t Need to Talk to a Financial Advisor
Most people assume their first phone call after receiving divorce papers should be to a lawyer. In reality, it’s important to build a whole team of professionals, including a financial advisor. Your advisor can take the lead on coordinating and communicating with your lawyer, banker, tax professional, and anyone else involved in the proceedings. Your advisor will help you navigate the transition into an independent lifestyle and, most importantly, help you rebuild a strong financial foundation post-divorce.
Preparing for Divorce?
Whether you initiated the filings or were caught off guard, divorce is a stressful process. It’s best navigated with a team of knowledgeable, compassionate professionals on your side. If you’re looking for support and guidance during this difficult time, reach out to our team today.
Sources:1In a Growing Share of U.S. Marriages, Husbands and Wives Earn About the Same
Written by Natalie Marin in collaboration with Lexicon Advisor Marketing