Divorce is one of the most stressful experiences in one’s life. I’ve been through it myself and I can attest to the emotional and financial strain. Remember - this is NOT your defining moment. You will bounce back!
While the divorce may be best for both partners in the long run, in the short term - it is difficult to see the upside.
Aside from a great therapist and a good lawyer, your best ally during the divorce process is a sound Financial Planner.
While it’s a relief to reach a marriage settlement agreement and have a reprieve from the paperwork, it’s critical that you attend to your finances and get your new household in order.
Here are a few things to keep in mind:
1. Cancel joint accounts. Joint accounts that remain open are liabilities that could come back to haunt you and confirm that the account cannot be re-opened.
2. Open new accounts. If you’re changing your name, wait until this is finalized and open new checking, savings and investment accounts.
3. Change beneficiaries. Review all your accounts with a beneficiary such as:
4. Update your personal insurance coverage. Contact your insurance broker and update your automobile, homeowner’s, and umbrella liability coverage.
5. Create an emergency reserve. Now that you’re single, it is more important than ever to have a cash safety net. Save three to six months of living expenses in cash and set it aside in a savings account.
6. Check your credit score. If there are discrepancies, notify the bureau immediately.
7. Retitle assets in your name. Name changes take a long time but you must be fastidious!
8. Assemble a new team - circle the wagons and choose experts that you trust and have your best interest in mind. It’s often practical to start over with a new professional rather than working with the person you and your spouse both relied on during your marriage.
A Financial Planner to help organize your assets, draft a sustainable budget, and analyze your investments.
A CPA to run tax projections and ensure your taking all the appropriate deductions.
An Estate Attorney to draft a new will, healthcare directive and living trust if applicable.
Whew! It’s a long list of divorce financial tips, but just tackle one at a time until you’ve addressed each of them.