Beyond the impact to your personal and emotional life, divorce also has a huge effect on your financial life. As you forge ahead with turning one household into two, you must split up assets with your spouse, decide on support payments, and plan for your new financial future.
This journey can be time consuming, expensive, and emotionally draining, but the right financial decisions can help alleviate the pain points. Here is an overview of financial planning essentials for during and after divorce.
Gather Your Financial Records
As you meet with lawyers or mediators to decide how to split up your assets, you need a clear picture of everything you own. Take some time to gather all your financial records including the following:
- Statements for checking, savings, retirement accounts, and credit cards
- Paycheck stubs or profit-and-loss reports if you own a business
- Last three years of tax returns
- List of significant assets and debts
If you’re worried that your spouse may be hiding assets or accounts, you may want to consider consulting with a forensic accountant.
Open New Accounts
Throughout the divorce, you need to close all joint accounts with your spouse and open new individual accounts. You may want to open your new accounts early in the divorce process. Then, you can easily deposit funds into them as you start closing your other accounts.
Remove Spouse’s Name From Financial Records
As you prepare to live a separate life from your spouse, you need to remove their name from all financial records. To ensure you don’t overlook anything, plan to devote some time to this task and make sure to look at all accounts, big and small.
If you’re staying in your current home, you need to remove their name from utility and cable accounts. Similarly, if you are moving out, you need to remove your own name from these accounts. Although they are relatively small, they can add up, and you don’t want these bills to show up on your credit report if they go unpaid.
Together, you need to remove names from home, car, and other property titles. Then retitle these assets in your individual names as decided in your divorce agreement.
Finally, make sure to review the beneficiaries on all your life insurance and retirement accounts obtained personally or through your employer. Many, many people forget to make these changes, and in the wake of an unexpected death, the wrong beneficiary listed on your accounts can create a lot of discord for surviving loved ones.
Create a Budget
After the divorce, your income and expenses are likely to change as well as your responsibilities and financial goals. To prepare for your new life, take some time to make budget projections. You may want to do this a few times during the divorce process as you make decisions about changing your residence and lifestyle.
Look Over Your Investments
In addition to thinking about your day to day financial life, you should also think about the long term. How are your home ownership, retirement, and business goals changing? In light of those changes, you may want to alter your investment strategy, take early disbursements from some investments, increase your investing, or make other changes, and ideally, you may want to consult with a financial professional through this process.
Schedule an appointment with me today, for further guidance: Pamela Flournoy CDFA™, CFP® – Online scheduling (oncehub.com)
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
This article was prepared by WriterAccess.
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