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Protecting yourself financially in divorce

If you are thinking about divorcing your spouse, you may feel like leaving her or him is the hardest thing to do. However, if there are high-value assets at stake, you may find that splitting your assets is even harder. You may not want to share everything you have worked so hard for with your partner. When it comes to divorce, Colorado is a community property state. Whatever assets you and your spouse acquired during your marriage must be divided according to the rules of equitable distribution. 

You may feel inclined to offer your partner everything he or she wants just to speed the separation process up. Not carefully thinking about the effects of all offers and agreements before the courts approve them can be damaging to your financial health. Here are some ways to protect your assets. 

Inventory your assets 

Document every individual and marital asset you and your spouse own, and be sure to include their locations. If you are not sure if something is marital or separate property, the courts will do it for you. However, you can avoid surprises, omissions, hidden assets and complications by knowing about all assets involved. 

Know the tax implications 

Before agreeing to any settlements, you should think about how they can impact your tax situation. Some of your assets may not have any impact on your tax situation because they are nontaxable. However, some settlements may include taxable assets that may increase your post-divorce liability. 

Separate finances 

You should start separating your accounts to avoid potential issues that can occur if your spouse decides to be spiteful and not honor financial obligations. For example, the mortgage may be in both of your names. Your partner may try to force you to give up your claim to the house by not paying his or her half of the mortgage payments. Most creditors do not recognize divorce as a qualifying event to absolve you of responsibility for joint debts. It is best for you to pay off your joint debts, close the accounts and open your own. 

To avoid starting over with a less than desirable financial profile, take measures to protect your finances during your divorce. Monitor your habits and situation so you can make the right decisions to minimize the effects of your separation on your financial situation.

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