After completing what is often an arduous divorce process, managing your newly disarrayed finances doesn’t sound nearly as attractive as finally having a moment to relax. However, by sorting out your finances early on, you’ll be able to achieve peace of mind much sooner. Revising your will, concentrating on saving for the future, considering a consultation with finance professionals, and updating your beneficiary designations should all be on your “post-divorce to-do list.”
Rename your beneficiaries
Unless you want your ex-spouse to continue to be the beneficiary of your financial accounts or insurance policies, you should update them. Some clients don’t realize that a divorce doesn’t automatically terminate your spouse’s right to your retirement plans, bank accounts, and life insurance. To change this, you will need to submit a formal change of beneficiary form to each financial institution. If not, the benefit will be paid to whoever is listed on the form at the time of your death.
Revise your will
Similar to the above, unless you want your former spouse on your will, you need to make changing your will and power of attorney a priority. Meet with an attorney that can ensure your ex-spouse is not entitled to any distribution.
Check up on divorce documents
Though your spouse is legally entitled to comply with the divorce settlement, it doesn’t automatically ensure that he or she will follow through voluntarily. After your divorce, review your documents to be certain that all of the assets you were rightfully awarded have been transferred. If the other party fails to do so, take the necessary steps, including potentially going back to court, to ensure compliance. Don’t be afraid to take what is yours!
Look to the Future
Though you may feel financially depressed after a divorce, the future can still look bright and secure. However, it is likely that you will need to make adjustments to make that happen – which includes more budgeting and saving.
- Emergency fund: Before your divorce, you could likely count on your spouse’s financial support if an emergency, such as an illness or losing your job, struck. However, as an independent individual, you need to take matters into your own hands. To help protect yourself against an unplanned emergency, try to establish an emergency fund equal to three to six months of living expenses.
- Consider meeting with financial professionals: Even if your divorce attorney obtains the best resolution possible, you should still seek the advice of a financial planner on how to manage your money and live within your means. CPAs can help you avoid making costly, common tax errors in regards to retirement, spousal support, child support, and asset transfers. Spending money now on financial professionals will generally pay off in the long run.