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A guide to managing divorce and your finances
Oct 15, 2026 12:28 AM

  

A guide to managing divorce and your finances1

  Going through a divorce can be complicated and frustrating. After all, there’s a lot to untangle when you and your spouse’s lives—and finances—have been entwined for some time. Add kids, and there’s another layer of complexity (and emotion) to consider.

  As you move forward with your divorce and begin to decouple your finances, some pressing issues are likely to demand your attention.

  Divorce and finances: Top considerationsThere are dozens of matters to consider as you work through a divorce, including plenty of financial issues. You’ll need to decide how to handle:

  Community and individual propertyBank accountsDebtInvestment and retirement accountsDigital assetsChild-related expenses, including health care insurance and extracurricular activities or hobbiesCommunity vs. individual propertyAmong the first things to figure out are which assets are community property and which are individual property. A basic guideline is that anything acquired during the marriage could be considered community property, while anything you had before you were married may fall into the category of individual or separate property.

  Depending on which state you live in, some assets—such as a business, investments, or inheritance—could still be considered separate property even if they were acquired during the marriage. It all depends on state law and a judge’s interpretation. Having the proper documentation and/or receipts can help streamline the process of determining what’s yours and how you acquired it.

  What to do with bank accountsEven if you already have some separation in your finances, many couples have at least one joint bank account for shared bills and expenses.

  Create a list of all your shared and individual bank accounts. This will help you visualize everything (and you’ll need it for the divorce settlement, anyway). Keep your individual accounts for now, and consider what to do about joint accounts.Open a bank account in your name. If you don’t have a separate bank account, open one in your name. If you have a source of income, have it deposited into your separate account.If you have a friendly relationship, you can go to the bank together, close your joint accounts, and divide the money. If your relationship is antagonistic, you probably won’t be able to close any joint accounts until after the divorce settlement.How to handle debtHow you approach debt depends on what you’re dealing with and whether your accounts are individual or separate. In general, debt in your name is considered yours, no matter who racked it up. If your soon-to-be ex has been using your credit card to run up bills, you might still be responsible for paying that debt later.

  Each of you should get a copy of your credit report and review it, noting all the accounts, the balances, and whether the accounts are joint or individual.

  Decide whether you want to pay them off now or divide and conquer later. If one party is assuming the debt, it should be refinanced into that person’s name.Joint credit cards should be closed. Most credit card issuers will allow you to close joint accounts and pay them off over time, if necessary.If your ex is an authorized user, and it’s not a true joint account, you can remove them from the credit card without getting permission.In a contentious divorce, a judge may apportion the joint debt, noting each party’s responsibility in the divorce decree. Until the debt is paid off or a creditor agrees to remove one person from the account, however, creditors see you both as equally responsible. Mortgage debt:

  If one person is staying in your marital home, the mortgage needs to be refinanced into their name. A nonworking spouse might have trouble doing so. Depending on the situation, if one partner is ordered to pay alimony, it could be considered income for a nonworking spouse, but they may still need to get a job to qualify for refinancing on their own.Consider selling the home, paying off the mortgage, and dividing the proceeds. Each of you can then use your portion for a down payment on another home.It might be possible for you both to remain on the mortgage until the home is paid off. You’ll need a co-ownership agreement and to be on good terms for it to work.Dividing investment and retirement accountsSeparating investment accounts can be complicated, depending on how they’re set up:

  Joint accounts. You could liquidate the accounts and divide the assets according to a formula or each partner’s risk tolerance. Just make sure you understand the tax consequences. You may have to split the capital gains taxes later.Individual accounts. In general, you might each keep your individual accounts, but if one spouse has a higher income, it may not be your decision alone. A judge might require someone who was able to invest more—while the other partner made less but took care of the house and children, for example—to share some of the assets from an individual account.Retirement accounts. If there’s a big difference in income, a divorce settlement typically requires the higher-earning partner’s retirement account to be divided. This is known as a qualified domestic relations order, and it comes with certain rules and restrictions. The gender pay gap and average longevity generally mean that women often get a portion of a husband’s retirement assets.Dealing with digital assetsIn today’s world, you probably share more than just traditional financial accounts and arrangements with your partner. You probably have accounts for music, streaming media, and online retailers, and you need to figure out how you’re going to divide them up.

  Perhaps you’ve built an extensive music library using Apple Music. A decision may be made about who gets to keep those digital tunes or whether they need to be parceled out, which may involve one spouse buying some songs from the other.

  Maybe one of you uses the Amazon account more, so you let your spouse keep it. But now you need to set up your own separate Amazon account. The same goes for streaming services like Netflix or Disney+. And then there’s your cell phone plan. Do you need to get a new plan on your own? Or are you on good enough terms to keep your family plan and have one ex-spouse pay the other for their portion of the bill each month?

  When crafting your divorce settlement, be sure to spell out who gets what digital accounts and assets. And change the passwords on the accounts you’re keeping ASAP.

  Think of the childrenIf you have kids, you’ll need to figure out custody and child support arrangements (or have the state do it for you). But you must also decide who’s paying for child-rearing expenses, including health care coverage, activities, hobbies, and of course food. You might:

  Split costs 50-50 after child support and other items are factored in.Split costs according to proportional income. One spouse might pay 70%, while the other pays 30%, depending on how incomes compare.If the spouses can’t agree about how to foot the cost of activities, it might fall on the one who’s most passionate about piano lessons, for example, to suck it up and cover the full cost.

  One final consideration, now and/or in the future: college costs. If you have a 529 plan or other savings earmarked for the kids’ education, you’ll need to decide who will manage each account until it’s time to use it. And how do you and your ex-spouse plan to pay for college when the time comes? It’s best to set expectations now, both with each other and with the children.

  If things are amicable, sitting down with a financial advisor and a mediator to hammer out details might suffice. Once an agreement is made, you both sign it, file the paperwork with the state, and move on. In an antagonistic situation, you both hire attorneys who communicate between themselves. Make sure your lawyer knows what’s important to you and where you can be flexible.If you’re escaping abuse, you may need or want to call around to get several lawyers’ opinions to find the best representation for your situation. Consider building up a separate emergency fund, making arrangements in secret if you can, and getting support from your network or a social services agency before you make your move.If you or someone you know is experiencing domestic violence, call the National Domestic Violence Hotline at 800-799-7233. Available 24 hours a day, seven days a week.

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