The more financial information a soon-to-be ex has going into a divorce, the more prepared he or she will be to negotiate and make quick shifts in thinking and planning when necessary. The first step is to get three years of tax returns, W-2s, and other income-related information.
Next, it is necessary to understand expenses. Credit card and bank statements for several years can help provide a record of these. Online software that pulls and categorizes account information, as well as a financial professional, can also be helpful. If there is a business involved, it is important to determine whether it was used to pay any personal expenses. With this information, a spouse can then create a lifestyle analysis, which is a record of past costs and a forecast of future expenses. Spending should not be underestimated. For example, this means remembering that some costs, such as health care, far outstrip inflation.
Spouses may want to get copies of their credit reports to ensure that they are not overlooking any financial obligations. This includes shared accounts that may need to be closed. A net worth statement is an accounting of all assets and liabilities. Both partners in the divorce will be required to submit full financial information to the court.
This information is necessary for negotiating property division as part of the divorce process. Despite the fact that California is a community property state, meaning that each person owns half of all marital assets, there is actually some flexibility. Couples may want to take advantage of this by trying to reach an agreement outside of court. One common approach is for each spouse to keep certain assets instead of dividing them all. Legal counsel could help a couple through this division process.