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Assessing finances crucial for asset division in divorce

Maryland residents know that a divorce usually means that both spouses will undergo significant changes to their respective financial portfolios. Many of those who are facing the prospect of asset division during an impending divorce would be well-advised to seek financial help in order to better understand what their assets and liabilities are going to be before they agree to any particular asset division.

It is wise to gather all records of jointly and individually held bank accounts, previous tax returns, monthly bills and pension plans. These must all be examined closely prior to making a final equitable distribution. All credit cards that are in the other spouses name need to be cancelled and individual accounts set up. Also, it is highly advisable for each party to create a budget and stick with it as each spouse's standard of living is likely to change following a divorce. An emergency savings account is also recommended for anyone undergoing a divorce. Some experts peg the amount that should be in that account at $2,000.

Being pragmatic about what lays ahead will significantly help in dealing with whatever obstacles come along. It is highly advisable, especially in a high asset or high income marriage, to meet with a financial advisor prior to or during the divorce process. A financial advisor will be able to guide each person through the difficult financial path that often accompanies a divorce.

Another important tool that can be utilized to limit the impact of a divorce on a person's financial well-being is entering into a prenuptial agreement prior to a marriage. This agreement can protect all of a person's individual assets attained prior to entering a marriage and spell out terms of distribution of assets accumulated during the marriage. A postnuptial agreement is another option for those who are already married.

Source: The Durango Herald, "Before divorce, prepare yourself financially," Hadley Malcolm, USA Today, Sept. 14, 2012

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