Where to Start
Hopefully, you know everything there is to know about the finances of your household and will easily be able to create — or access — a net-worth statement with the list of assets and liabilities that you both own, and a budget or income-and-expense statement showing you what the household cash flow is. Many couples agree that one person will act as the family bookkeeper, pay the bills, and keep the accounts. This person should have all that information, but the non-bill-paying partner may not. If this person is you, you'll need to do some gathering to put together the financial information you need.
There are state-specific laws governing divorce for couples who are married, who are domestic partners, or who have common-law marriages. Your lawyer will help you understand how your state's laws affect you. Once you have your financial ducks in a row — as best you can — meet with an attorney to sort out the legal steps you'll need to take.
Information You Need
Refer back to Chapter 1 for help creating a net-worth statement and an income-and-expense plan or budget. Work out two statements and two budgets, one for the combined household and one for you alone. It's important to know what you own, what your partner or spouse owns, and what you own together. You'll need to understand what your current income sources are, what your expenses are now, and what they might be when you're by yourself.
Make a list of all the insurance policies you and your partner own. These include homeowner's or renter's, auto, life, health, and disability insurance. Chapter 4 will help you understand how each of these works.
Be sure to account for benefits that you both have through work. Employee benefits include 401(k) or 403(b) plans, stock options, restricted stock grants, and pensions. Chapters 6 and 7 will help you learn more about these plans.
Don't forget to gather information on real estate or other tangible assets such as works of art, boats, planes, and cars. Your county registrar's office will have copies of real estate deeds. Find purchase records or receipts for valuables such as art and jewelry or have them appraised. If the separation has just happened, don't pay for the appraisal out of your own funds or joint funds if it will be expensive and leave you short of cash. Instead, make a note that assets need to be appraised and include that in the negotiation discussions.
Where to Find Information
You can get plenty of valuable information from the investment statements, bank statements, and monthly bills. Remember that many bills may only be available online; if you have a category on your expense worksheet — for example, “electric bill” — but you haven't received a bill, call the company for help retrieving the online statement. Some investments such as annuities, employer retirement plans, and life insurance might have statements that arrive quarterly or annually instead of monthly.
If statements aren't mailed and you're not sure how to access e-mail copies or electronic statements, you can start your sleuthing in your tax documents:
Check your tax return for a list of accounts that generate interest and dividends.
Page one of the Form 1040 tax return will show the amount of a deposit that was made into an IRA or a self-employed retirement plan.
The return will show income sources and possibly a list of deductions for real estate taxes and mortgage interest paid.
There may be schedules in the return that show income from active or passive business ventures.
If there is a W-2 form with the return, you'll see the amount contributed to an employer retirement plan and the income from that employer.
The 1099s with the return will show nonemployment income such as interest, dividends, and retirement plan withdrawals.
Pay stubs will show income per pay period and year-to-date. Many companies — especially large ones — have stopped mailing pay stubs and now offer copies online. Some jobs may have more than one pay stub. Bonuses, commissions, or extra duties such as police details may be on separate stubs.
Develop Postbreakup Goals and Priorities
You'll have an easier time making financial decisions during the breakup negotiations if you spend some time now thinking about what your priorities are for your life afterward. Think far down the road: Where do you want to be in five, ten, fifteen, and even twenty years? Go back and look at Chapter 2 for help in developing your goals. Write down your most important goals and carry them with you. Refer to them when you're tempted to make a decision that will make the short term easier, but will hurt your long-term chances of reaching your goals.
