Money Making Sense: Separating your finances during a divorce

SALT LAKE CITY — Divorce is a complex process, and untangling finances often adds to the difficulty.

Lisa Zeiderman, an attorney and managing partner at Miller Zeiderman LLP, certified financial litigator and a certified divorce financial analyst, spoke about protecting your finances before, during and after a divorce.

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Protecting your property finances

Zeiderman said one way people can protect their finances is by keeping track of their separate property.

“So, property that you’ve either inherited or came into the marriage with, that you have kept track of it, that you have not commingled it, that you can actually trace dollar for dollar where it is.”

Zeiderman said to keep statements related to separate property, making sure the property isn’t commingled with marital funds, and not put into joint accounts. Zeiderman added that keeping inherited items separate from the marriage is important.

“If you keep inherited property separate and a part you’re going to get your inheritance, 100% of it,” Zeiderman said. “And maybe even the appreciation on that inheritance after you have received it.”

What should a person do if they’ve been married a few years and their spouse now has their name on that inherited property?

“So, if it was property, meaning, you know a house or a real property of some sort, you still might get what’s called de-separate property credit for it,” Zeiderman explained.

Zeiderman said if a person were to inherit a million dollars and put that money into a joint account with their spouse, you may not get credit for that because the long term use of that account makes it so the money is not identifiable.

A working spouse

Zeiderman also said it might be a good idea to encourage your spouse to work and make their own money.

“If you are the person who is the moneyed spouse, the person who is earning, you might want to encourage the other spouse to also be working and contributing to the marriage,” Zeiderman said. “Because, otherwise you may be in a situation where you’re paying alimony or spousal support if you’re not doing that.”

Tracing financial infidelity and abuse

Once a person has identified the signs of financial abuse in a marriage, how does that person then trace someone else who has lost all of their money?

“If there is money to retrieve, and tracing it is something that you are able to accomplish by looking at credit card statements, bank statements,” Zeiderman said. “If it’s gambling you might subpoena casinos.”

Zeiderman said sometimes a person may be able to trace that money by looking at social media and tax returns. She said when there’s a gambling win, that win is usually reported on tax returns.

“In terms of extramarital affairs, you’re going to looks at, again, credit cards, bank statements, cash withdrawals, all of those types of things,” Zeiderman said.

Zeiderman added that the spouse is the best person to look at these records because they will know if they stayed a hotel with their spouse or if their spouse was traveling, for example.

“At some point you want to get to a place where you’re actually able to quantify the amount of money that has been used for what we call a wasteful dissipation of assets,” Zeiderman explained.

Zeiderman said something to keep in mind is that the other spouse who has been wastefully dissipating the assets is likely to end up with around 50% of those assets.

After the divorce

Zeiderman said something a person might want to do is get a prenup done if a new marriage comes along.

“You certainly want to think, if you get remarried, you’re going to want to make sure that you enter into a prenup,” Zeiderman advised. “You’re going to want to make sure that you actually protect those assets that you have just actually received as part of your divorce settlement.”

Another thing to think about is how an alimony may come to an end. Zeiderman said the person receiving that alimony should think about where that money will now come from, and how they will support themselves when the alimony comes to an end.

Check out more episodes of Money Making Sense with Heather Kelly.