Finances are one of the most significant concerns for most people when they divorce. North Carolina is an Equitable Distribution state. That means if the court decides how to split your money, the division will be roughly equal — but not necessarily what either partner considers “fair.” If you and your partner can work out how to divide your money on your own, you’ll probably both feel far better about the result than if you go to court.
So, yes, you can split and keep your own money, but a lot depends on your situation. For example, a couple who has no children who each earn about the same amount of money might quickly decide to take their own paychecks and split the joint bank account. One person agrees to take on the mortgage, while the other moves out and keeps her student loan debt, which was hers before the marriage anyway. In that situation, keeping your “own money” is not difficult.
However, let’s look at Couple B. They have two kids, and one partner earns less money than the other. The partner who earns more is likely going to pay child support, depending on how much time the children spend at her home. However, the partner who makes more may also wonder how much of her/his money may be used for alimony or be given to the other partner during the equitable division.
That depends on all other assets and debts you have as a couple, as well, but if you’re concerned about it, here are four ways that you can start separating your money outside of the courtroom:
Establish your own bank accounts. During your marriage, you probably had a joint bank account. After deciding to divorce, create your own accounts and have each of your paychecks go to those accounts, respectively. Some couples choose to keep one joint account together before their divorce is finalized to pay for household expenses or their children. If this is the case, be sure to specify what happens to the money when the divorce is final. It’s best to establish individual accounts early on and then slowly get rid of all of the joint accounts throughout the divorce process. Having your own account can also be beneficial in establishing a credit history of your own.
Assign debt. Debt, such as a mortgage or credit cards, might be in both you and your spouse’s names during a marriage. When you divorce, you and your spouse need to decide on a plan to begin paying for the debt, because you both owe it. Each of you should take inventory of the debt, so you both know what is owed. If you and your spouse decide to each pay monthly, every time you pay, make sure they are keeping up his/her end of the bargain. Also, make sure that all of the debts your name is on, you signed for, because sometimes your spouse may try to get you to take half ownership of their debts. Know which ones are yours. (More on Dividing Marital Debt During Divorce.)
Divide assets. Just like you make sure you are not paying more than your spouse on your joint debt. You need to take inventory of your assets and property, so when you split, all the money that belongs to you gets to you. (More on Dividing Your Accounts and Assets During Divorce.)
Will. Many couples make a joint Will, with the spouse as beneficiary. Each of you must now update your Wills separately as soon as possible. That way if something happens unexpectedly, your money and property won’t be awarded to your ex-spouse.
Finances during and after a marital split may be complicated. Many couples find that it is best to work with a Certified Divorce Financial Analyst or a mediator throughout the process. If you have any questions, be sure to register for our next Second Saturday Wake County workshop!