Divorces are highly disruptive to your personal life and finances. This guide can help you with at least half of that problem. With a little planning and organization, you can reduce the financial hit you'll take and build a solid plan for the future.
Take A Financial Inventory
This should include both assets and liabilities. Gather documentation of:
- Retirement statements
- Family heirlooms
- Credit reports
- Automobile titles
- Real estate documents
Your lawyer will be able to give you a more complete list of what to look for.
Choose Your Lawyer Carefully
Are you going down the settlement or litigation path? If you and your soon-to-be-ex-spouse are both on board, settlement can be the fastest and most inexpensive route to separation. However, there are no guarantees, and negotiations can break down.
Litigation may end up with a more equitable result. Look for a lawyer with extensive experience in whichever path you choose.
Avoid nasty surprises by learning everything you can about what to expect in the divorce. According to Forbes, this may include:
- Responsibilities for loans
- How your tax situation will change
- Child support concerns
- Whether the housing market is favorable to sell your home
Your lawyer, accountant, or financial planner are great resources for this information.
Update Your Beneficiaries
Use your financial inventory as a resource to decide what to leave to which family member or charity in your will. You should also contact life insurance, retirement plans, and other beneficiary-directed accounts. Also be sure to update any powers of attorney, trusts, and guardianships that you have.
Start Adjusting To Post-Divorce Financial Life Now
Instead of waiting until after the divorce to cut back on expenses in your new, single-income household, start as soon as possible. This will mean a less chaotic transition to single life.
Look at that financial inventory again and see what bills will need to be transferred into your name and what credit card payments to expect. Learn how everything is paid (via check, bank transfer or credit card) and set up a schedule. Smartphone reminders can help you make sure nothing slips through the cracks.
Create A New Financial Plan
Your divorce has likely thrown your retirement plans, emergency fund, and other finances into chaos. This is a great opportunity for you to refocus on your priorities and create a step-by-step plan for a financially secure future.
If you have any questions, a consultation with an accountant or financial planner is a worthwhile investment that can save you time, money and stress.