Whether you are going through a divorce or contemplating a divorce, this year-end checklist is for you. While divorce filings increase in the new year, the time to prepare for the divorce process is now. Attorney Linda S. Vanden Heuvel, a recognized Wisconsin family law attorney, provides the following year-end checklist for divorcing clients or those contemplating divorce in 2014.
1. Collect all financial documents. Now is the time to identify and collect quarterly and year-end statements for bank accounts, IRAs, 401(k)s, credit card bills, mortgage statements, investment accounts, and the like. Make copies. Store them in a place that is easily accessible.
2. Obtain a credit report. Check it carefully for accuracy. If it is not accurate, take the necessary steps to correct any errors. Make sure you verify and keep copies of all correspondence with reporting companies, TransUnion, Equifax and Experian. Continue to check your credit report regularly so that you can identify any irregularities or charges/changes that are unknown to you. Your spouse may be decreasing your credit or making unknown expenditures resulting in credit inquiries. Keep your eyes open.
3. Open a savings and checking account in your own name. Consider using a new bank or credit union. Getting credit in this day and age is more difficult than ever. Start the process in advance of filing for divorce, if possible.
4. Create a list of all your financial assets. In addition to real estate and monetary accounts, don’t forget life insurance, air miles or other credit card awards or points, hotel points, etc., art work, jewelry, etc. Do a similar list for debt. Correct and verify the numbers monthly.
5. Consider and verify your and your spouse’s income from all sources including W-2s, 1099s, rental income, last payroll stubs, etc. Also keep in mind 401(k) contributions, car allowances, travel allowances, health, life and disability insurance premium payments, etc. While not all of these constitute income, the court may nevertheless take these payments into consideration when calculating the other spouse’s expenses and need for maintenance, especially if these benefits are not available to him/her.
6. Determine when you are able to change beneficiaries on life insurance policies, retirement plans, powers of attorney, bank accounts, etc. This is a question of timing. Remember to comply with all orders in existence at the time any change is made, but to make the changes as soon as legally permissible.
7. If your divorce is pending, give careful thought to how you want to file your taxes. Divorcing spouses are considered married if they are legally married on December 31st and unmarried if they are divorced prior to December 31st. Talk to an accountant or your attorney about your filing status (married, married filing jointly, head of household, etc.). Your filing status can significantly alter the determination of your income tax refund or liability. If you decide to file jointly, review your taxes before submission to the IRS. If you file a joint return, you are “jointly and severally liable” for the contents of the return. If your spouse lies on the return and you have signed the return, you may potentially be found liable for any penalties, interest or fraud. While there are “innocent spouse” protections, it is far better to address the issue in advance rather than with the IRS after the fact. Consider having an accountant review your return in advance of its submission.
8. If you and your spouse are filing separately, make sure you know whether you or your spouse is allocated the income tax deduction(s) for the child(ren). Negotiate and settle the issue in advance of filing your taxes. Determination of who gets the dependency exemptions, head of household status and income tax credits is part of the negotiation process in divorce.
9. It is imperative that you consider capital gains taxes and other tax consequences of property division. For example, if you are awarded the residence, you may ultimately be responsible for all capital gains taxes resulting from the future sale of the residence. These are issues which much be addressed prior to the divorce resolution and settlement. If you wait until after the divorce, it may be too late.
10. You may lose your current health insurance coverage as a result of your divorce. The health insurance you obtain after the divorce may not provide equal coverage. Take care of all your medical and dental needs now, so that you are financially covered by your spouse’s health insurance and if applicable, dental and optical insurance coverage.
11. Consider removing any valuables or personal items from the residence. Don’t hide them, just move them so that these items are accessible to you. You are obligated to disclose property in a divorce action, so you cannot make the items disappear. However, you may move the items to a different location provided the items are identified and their location disclosed and provided there are no orders in existence which state otherwise.
12. Know your social security number, driver’s license number, date of birth, bank account numbers, etc. Have the same information available for your spouse and your children, where applicable.
13. Set aside some money, or obtain a credit card in your own name. Hiring a divorce attorney, evaluating property and potentially paying a Guardian ad Litem, may be costly, and it is imperative to have funds available to address these expenses. Be prepared. Identify and maintain a source of funds.
14. Check your email, Facebook, Twitter, Linked In and other social media accounts. Make sure there is nothing on these accounts that can be used against you in the divorce action. Remove or block anything potentially incriminating. Rest assured that if this information is on social media, it is accessible to your spouse and his/her attorney. Be careful of the emails and texts you send to your spouse. Emails can be printed. They can be kept for years into the future. These communications are generally admissible in court.
15. Every now and then check your car. Make sure that your GPS is erased. Make sure your car is not tagged with a GPS. Your I-Pass can be traced. It is possible to determine when your car has passed through tolls.
16. Dating websites are a source of much information, including income, assets, etc. Your web history is also subject to subpoena in some circumstances. Be aware of these factors before and during the divorce process. If you wait, it may be too late.
17. Review prior tax returns to provide a guide of income sources and liabilities. An accountant or a divorce financial advisor can assist in reviewing prior tax returns, determining your tax bracket, providing guidance relative to asset division, tax ramifications, maintenance calculation, etc.
18. Hire an effective, knowledgeable, family law attorney with a local presence and recognized reputation in family law. Make sure you have a rapport with the attorney and that you sign a contract which spells out fees and costs. Check Martindale-Hubbell www.martindale.com and Avvo www.avvo.com to review the attorney’s rating and reputation.
A lawyer for over 30 years, Attorney Vanden Heuvel is a top-rated attorney in the areas of family law and divorce. She is the author of Divorce in Wisconsin, The Legal Process, Your Rights, and What to Expect, which is scheduled for publication in 2014. Vanden Heuvel can be reached through her website www.vhdlaw.com.