Getting divorced is one of the most stressful experiences a person can go through. On top of grieving the breakup and adjusting to life post-divorce, there may also be complex financial decisions to make in order to protect your financial future. Without careful planning, you may find yourself with an unfair division of property or an unsustainable alimony agreement. In this blog post, we'll cover some steps that can be taken to help ensure your finances remain safe after a divorce so you can focus on rebuilding your life again with confidence and security.
Hire an Experienced Financial Advisor
A divorce can leave you vulnerable in terms of both present security and long-term well-being. One way to look out for your own interests is to consult with a qualified and trusted financial advisor. Experienced advisors can help analyze the specifics of your situation and provide guidance on topics like the division of assets, budget management considerations, and investment strategies. With their assistance, you can create a plan that helps protect both your financial standing now and in the future.
Take an Inventory of Your Assets and Liabilities
Another step you should take during the divorce, preferably early on, is to inventory all assets and debts that are jointly owned. This includes not just tangible assets like real estate, jewelry, cars, investments, and bank accounts but also intangible assets like intellectual property. It's important to list these items (and any associated debt) so there’s an understanding of what’s shared financially, which can help ensure that both parties receive an equitable distribution during the divorce proceedings.
Begin Opening Accounts in Just Your Name
It may be a good idea to start opening accounts (like new checking, savings, and investment accounts) in your name only. Doing this can help prevent money from being taken out of existing shared accounts without your knowledge and can act as a buffer between you and the other party during any kind of negotiation or settlement process.
Prepare Yourself to Share Retirement Funds
Next, take a look at all of your retirement assets and consider how they may be divided up as part of the process. This includes accounts like pensions, 401(k)s, and IRAs which as marital assets may have to be divided between both parties. Before heading into negotiations, it's key to gather important documents and understand exactly what accounts you own so you can make informed decisions about how you'd like them handled in the settlement. (Note that some states are considered “community property” states, which split jointly owned assets 50/50 during a divorce.)
Take Some Time to Update Your Will
Finally, don’t forget to meet with an attorney to make sure your will is up-to-date and that it reflects your current wishes. A will can help safeguard any money or assets you wish to pass on to family members or other beneficiaries. Since laws vary from state to state, you may want to consult an attorney to make sure you’re compliant with all the applicable regulations in your area. Knowing your will is updated and accurate will give you one less thing to worry about during this difficult time.
It can’t be overstated how crucial it is to protect yourself financially as you go through a divorce. Hiring an experienced financial advisor, taking an inventory of all of your joint assets and debts, opening accounts in just your name, preparing yourself to possibly share retirement funds, and updating your will are just some of the strategies that can be considered as one goes through a divorce. Remember, taking care of your finances today will help make sure you have the money you need for many years down the road. Divorce can be a trying time, but with the right preparation and planning it does not have to mean financial ruin.