Divorce is an emotional time for most people. It’s easy to let those emotions rule, but this is a time when logical thinking may be beneficial. One of the most important things for you to do is to consider the financial effects of the divorce.
Being able to start your new life with the best financial footing can help you to feel more secure as you make the adjustments that come with divorce. Consider these points as you get started.
Division of assets and debts
Make a complete list of everything you and your spouse own and owe. This includes real estate, vehicles, retirement accounts, credit card debt, personal loans and even frequent flyer miles. All of these must be handled in the divorce. It may be possible to liquidate some assets to pay off debts, so you may want to consider that so neither party has a large debt load starting out after the divorce.
Budgeting for life after divorce
Your financial life is about to change. Create a post-divorce budget that accounts for your new income, expenses and potential support obligations or entitlements. Think about housing, insurance, transportation, and any new costs, such as health coverage or childcare, that might arise. Remember that your new budget must be based solely on your income.
Updating legal and financial documents
After the divorce is finalized, update your will, power of attorney, healthcare directives and beneficiary designations on retirement accounts and life insurance policies. Failing to do so can lead to unintended consequences down the line.
Protecting your interests throughout the divorce is critical. Learning the options that you have may make this a bit easier. It may behoove you to work with someone who’s familiar with these matters so they can guide you.
