Should I Make Big Purchases During My Divorce?

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by Chris Torrone

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10.06.2021

Divorce is a stressful process, but if you are also trying to figure out what to do with your finances, it can be even harder. Many people wonder if they should wait until they are legally divorced before buying a car or making another major purchase. Many people aren’t sure if it is even legal to make a major purchase during divorce. In this article, we will discuss what you need to consider when purchasing a car or making other big purchases during the divorce process.

Is there a rule regarding big purchases during divorce?

The short answer is no, there isn’t any law that says you cannot purchase a big-ticket item while separated from your spouse and/or in the process of getting a divorce. The only thing you have to worry about is whether those items were purchased using community property, essentially, your shared finances. If so, you may want to think twice about spending valuable assets on a major purchase right away. You could end up having to pay for these expenses later.

The definition of what are separate vs. shared funds can get murky, especially if you and your ex were together for a significant amount of time and shared all bank accounts. While each divorce is different, it is generally the goal of the court for both partners to leave the marriage with relatively equal assets and be able to maintain their standard of living without a significant impact on their financial situation. Making a large purchase from a joint bank account could be looked upon negatively by a judge and significantly affect the valuation and your financial outcome following the divorce.

Now, there can be some exceptions to this, but you need to work closely with your lawyer to ensure that you are making a reasonable and wise decision based on your personal circumstances. For example, if you have children but were a one-car household during the marriage, you and your ex may agree to one of you purchasing a reasonably priced or used car to make transportation and visitation easier. A purchase of this nature makes sense in this situation and may not have a significant impact on your divorce negotiations if you and your ex are in agreement, or if you can prove that you used pre-marital assets for your purchase.

You may be in a situation where a car accident totals your personal vehicle and you need it to be able to keep your job, which, in turn, you need to provide for your children. Life happens and there are no rules that say that you can’t replace a necessary mode of transportation just because you are getting divorced. But again, this is a situation that requires communication with both your lawyer and your ex to ensure that you don’t complicate the divorce proceedings.

Another example could be one person choosing to move into a new space and purchasing large pieces of furniture like a bed and dressers for their kids. While it is certainly necessary that you demonstrate that you can provide a safe place for your child to stay, you still need to be careful of not using shared marital property. 

Consult with your family law attorney to ensure that making significant purchases, whatever the reason, is necessary before rather than after the divorce is finalized. Otherwise, you could complicate and draw out your divorce process, not to mention negatively affect your finances after divorce.

woman working with attorney on finances during divorce

Why it is still not a good idea to make a major purchase before your divorce is finalized

Before you start dreaming about what “reasonable exceptions” you can think of to make a big purchase, consider the downsides.

First, you never really know what kind of settlement you’ll receive at the conclusion of your case. Some people settle out of court and others choose mediation or trial. Regardless of the route chosen, you won’t always know exactly what you’ll walk away with financially. You may find yourself locked into expensive monthly payments for a personal loan that is no longer affordable due to your financial situation following divorce.

Second, even though you might feel like you’re doing something right when buying a car, house, or other major item, you may find yourself in an uncomfortable position later down the road. If you buy a $100k car and the court finds that you used communal assets to pay for it, then the equity of that car may be split between you and your ex. How comfortable would you be driving around in your new car knowing that your former partner has legal access to it? You also have to avoid any financial decisions that could negatively affect your ex’s credit score. If your finances are still shared and your bank accounts joined, you should avoid major purchases until your finances are legally separate property.

Third, you run the risk of being accused of hiding income or assets. In many states, spouses must disclose certain information regarding finances and property ownership prior to finalizing the terms of the divorce. This disclosure requirement exists to protect the rights of the non-custodial parent who wants to see his or her share of the family wealth fairly distributed. It also protects the custodial parent against someone else taking advantage of the fact that he or she doesn’t know what is going on. 

So, if you decide to hide assets or income from your spouse, you run the risk that the court could order you to pay spousal maintenance or child support until those items are disclosed. Even if you had no intention of hiding your assets with a big purchase, simply making those purchases may tell a different story in court than you intend. It could also result in you owing thousands of dollars to your ex in order to make up for making a major purchase using marital property.

Again, the issue is not whether you can make a significant purchase, but whether doing so before the divorce is final is going to be the wisest choice and what your choice says about you in court. Your divorce lawyer can help you get a better understanding of how your purchasing decisions will appear to a judge.

What if my ex is spending large amounts of money while our divorce is pending?

Of course this goes both ways. If you have serious concerns about your ex’s spending, bring it up to your lawyer. If you think they are making unreasonable and expensive purchases with shared assets, such as gambling, frequent vacations, or excessive impulse buys, your lawyer may be able to make the case that they are wilfully misappropriating funds. 

Torrone Law is here for your family. Our compassionate lawyers can guide you through the nuances of the legal process of divorce and ensure that you and your children have what you deserve to move on.

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