Succeeding financially during and after a divorce
Some people may not realize it, but a divorce can severely impact your finances – both immediately and in the future. The financial complexities of property division, particularly with high-value assets, can be overwhelming and intimidating.
With solid planning from the outset, you can work toward successfully managing your finances during and after a divorce. The following are steps you can take during the divorce process to help meet this objective.
- Carefully select your divorce attorney – Choose a lawyer who is knowledgeable about financial matters and skilled with divorce negotiations.
- Inventory your assets and liabilities – If you understand your financial situation, you are in a better position to negotiate a fair property settlement. Gather documents for all assets, liabilities, income and expenses, including bank account statements, retirement information and real estate documents.
- Consider the tax ramifications for each asset – All property is not equal. Some include taxable gains or will be subject to future income taxes, while others are tax-free. Keep this in mind during property division.
- Check your credit – Pull at least one credit report to check for debts or liens you may not know about. Request a copy of your spouse’s credit report as well.
- Update your beneficiaries – Review your retirement plans, insurance accounts and estate planning documents and change the beneficiary information as needed.
- Safeguard child support and alimony payments – If possible, try to ensure continuation of support payments if your ex-spouse dies or becomes disabled. This may require you to be named on a new or existing policy.
- Adjust your lifestyle to match your reduced household income – Know your cash flow, live within your means, manage credit card debt and continue to save for retirement.
- Learn to manage your budget – Understand your monthly bills, including utilities and credit cards, and pay them on time. If it helps, create a budget to balance income with expenses.