I’m planning to divorce. Do I need to keep my money separate?

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Q. I’m planning to divorce my husband but he doesn’t know it. I want to set up my finances first. We own a home together, have joint accounts and separate retirement accounts. Do I need to keep my money separate?
— Planning

A. We’re sorry to hear about your marriage.

There are several things you can start doing now to make the divorce process easier for the both of you.

To first address your question of “Do I need to keep my money separate?”

“The quick answer is that it is a very good idea,” said Amber Leach, a certified divorce financial analyst with AXA Advisors/R.I.C.H. Planning Group in Morristown.

But this does not mean you should start withdrawing funds and separating existing accounts. If the money is already separate, keep it that way, Leach said.

“If you do not have your own separate account then set up one. If you do not have a separate credit card, get one,” she said.

As you plan for the divorce, it is a good idea to start gathering all the statements and information for your finances, she said. You want statements for all your marital assets and liabilities.

Leach said it’s a common misconception that the titling of accounts automatically separates assets in divorce.

“If you received an inheritance and kept the assets separate and none of the funds were commingled into a marital account, that would be separate property outside the marital pot. Keep it that way,” she said. “ If it was not kept separate and put into the joint account then it can be considered marital property now.”

Also, she said, the fact that each of your retirement accounts are in separate names does not mean they are not marital assets.

If the assets were gathered during the marriage, they can be part of the marital assets that are looked at during equitable distribution, she said.

Outside of your assets and liabilities, you also want to start thinking about your income and expenses.

“As to your income, what is your future earning potential? Do you need more training? You will want to gather paystubs, W2s and your last couple years of tax returns,” she said. “As to expenses, start keeping a budget and pay attention and document your spending — not just monthly expenses but all those annual one-time expenses like vacations.”

She said you should also gather statements of any insurance policies, including health, car, house and life insurance.

After you are armed with the knowledge of your financial situation, Leach said you might want to start thinking about your life post divorce.

Consider whether you want to stay in the marital home and what the individual costs of your own health insurance, your own car insurance, cell phone plan and other costs will be.

Then you should start thinking of how you want to divorce, such as through attorneys, mediators and if you think you want the extra help with the finances, you can research working with a certified divorce financial analyst (CDFA) who can help you avoid any financial mistakes in divorce.

“All these steps can help give you the confidence to move forward with a divorce that is a little less scary and a little more empowering,” Leach said.

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This story was originally published on Jan. 28, 2021.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.