THE FINANCIAL DILEMMA OF DIVORCE:

Make the best of a bad situation

Good Christian people, despite their efforts, are frequent participants in divorce proceedings.

Notify all banks, credit card companies, and other financial institutions that you want your name removed from jointly held accounts, if you believe divorce is imminent. Anything you jointly own you're each responsible for. Pay up outstanding accounts, and end the joint-credit immediately. Telephone each institution, asking it to remove your name, and follow up with a certified letter reiterating your wishes.

If you believe divorce is imminent, request copies of past tax returns from the IRS to ensure that you are aware of all assets that exist in the marriage.

Be sure your attorney subpoenas the records of all accounts controlled by your spouse. Include on the list accounts in the names of your children for which your spouse serves as custodian. If your spouse owns a corporation, subpoena those tax returns as well. A corporation is a great place to hide assets.

Begin to establish bank and credit card accounts in your name only, as preparation for your eventual divorce. Your goal is to establish a positive credit record in your name alone.

Take steps to prepare for your own career. If you are a spouse who has been out of the workforce for a long time, do what you can to ensure your survivability. Secure part-time employment in the interim, with the plan of working full time when you are on your own.

If you are the primary wage-earner and believe you will have to pay both alimony and child support, you may want to have more of what you must pay classified as alimony. Alimony payments are tax-deductible to the spouse paying them, and fully taxable to the spouse receiving them.

If you are to be the recipient of alimony and/or child support, you may want to have more of what is paid to you classified as child support. Child support is taxable to the spouse paying it, and tax-free on the spouse receiving it.

If the divorce leaves you without a car, concentrate on purchasing what you can afford. Do not risk jeopardizing your financial health by purchasing a car you can't afford to pay for and maintain.

Build - or rebuild - a cash reserve for yourself through small monthly contributions to a no-load stock mutual fund. If the costs of divorce have wiped out your savings, get back into the investment habit as quickly as possible. Work to establish a cash reserve equal to 3-6 months worth of living expenses. Investing in a conservative mutual fund will provide liquidity, and if you don't need it for expenses, will put you well on your way to investing for the future.

Set up a retirement plan of your own if you've been left without one. Take steps to ensure that you won't have to rely solely on Social Security in your golden years. Set up an IRA and participate fully in any employer-sponsored retirement plan.

Ensure that you are covered by health insurance after the divorce. You can continue to remain on your spouse's plan for up to 36 months after the divorce, per the COBRA provisions. You must notify your ex-spouse's employer within 60 days of your divorce to activate this option. Or shop around for the lowest-cost major medical coverage.

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