Divorce can seem like a roller coaster ride of legal, financial and emotional complexity. Having a checklist of things you need to do can help keep you on track. Here are some steps you can take to ensure that the most important things get done.
- Adjust Accounts – As soon as you are legally able to, change your checking, savings, investment, life insurance and retirement accounts into your name only. Update the beneficiaries for these accounts to make sure money doesn’t go to your ex if something were to happen to you. Talk to your insurance agents as well as your state department of motor vehicles to update their records.
- Create A Budget – Your financial resources and expenses will likely change during, and immediately following, a divorce. Sit down and clearly lay out how much income you have each month as well as your mandatory expenses. Don’t forget to set some aside for unexpected expenses as well as an occasional, much-needed vacation.
- Automation – This can be your stress-reducing best friend. It’s easy to lose sleep wondering if you’ve forgotten to pay one of your important bills. Automatic payment can take this particular fear away. Take advantage of automation to pay yourself first each month as well. Put a set amount into savings each month. How small doesn’t matter. Just do it. You can always raise it later.
- Rebuild your credit – Credit can often take a beating during a divorce. Whether it stems from financial infidelity or just the division of assets and incomes into two households, your credit score is likely to be lower for a time. The time honored credit building rules apply here: Pay your bills on time, get a credit card only when you can pay it off each month, check your monthly statements each time for any discrepancies and report any of these to the card issuer ASAP.
- Understand your taxes – Even if you normally do your own taxes each year, consider hiring an expert for the first year or two until things normalize. Who can take which deductions and which spouse has to declare which income sources can be confusing and may change during the divorce process.
- Reevaluate Your Retirement – Retirement is often done in pieces by married couples, with some pieces more aggressively invested and others less so. After dividing a complete retirement plan from a divorce settlement, you can find your portion of the original portfolio largely out of balance with regard to your objectives, risk tolerance, or time horizon. Be sure to rebalance those assets to bring them back in line with your new circumstances.
If you have a contested divorce, retain your own financial advisor rather than relying on the one you used as a couple. Having someone entirely on your side is not only a good idea, but will give you more confidence that things are handled above board and correctly.
- Ask for Help – These tips can be overwhelming to someone not used to dealing with the details of their financial life. Talk to your financial advisor, or hire one if you don’t have one. Sitting down with someone who deals with these issues regularly can help lower your stress by making sure you have addressed all of the details. A financial professional can also provide tips and strategies on the best way to move forward to your FINANCIAL INDEPENDENCE.
Securities and advisory services offered through Infinity Financial Services. Member FINRA/SIPC
Infinity Financial, LGC Wealth Management, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.