- \ Gerard Gruber
- September 27, 2021
Going through a divorce takes up a lot of time and mental energy. While you’re just trying to get through it, it can be hard to focus on anything else. But now you’ve come out the other side and finances...
Going through a divorce takes up a lot of time and mental energy. While you’re just trying to get through it, it can be hard to focus on anything else. But now you’ve come out the other side and finances are at the forefront of concerns.
Now that the court has decided how your marital assets will be divided, it’s time to get to work receiving your share and building your new life.
Below is a checklist of items to tend to once your divorce has finally been settled:
1) Close Joint Accounts
During a divorce, the court typically considers funds and assets in joint accounts to be marital property. After the divorce, though, you’ll be ready to sever ties and this includes joint accounts. Even if you are awarded all (or none) of the funds in a joint account, you’ll still need your spouse’s participation to close it.
Closing an account is as simple as showing identification and signing documents. If you don’t wish to go to the bank together, one of you can get the process started and the ex-spouse can sign the papers later.
While it may be tempting to simply remove a user from a credit, checking, or savings account, it’s best just to close the joint accounts and start fresh whenever possible. This helps to prevent any future charges or liabilities from being racked up in your name.
2) Change Your Password and Logins on Financial Accounts
Most spouses know the other’s passwords, login credentials, and answers to various security questions. According to a Pew Research Center study, 67 percent of couples share passwords. While updating your passwords can be a pain, it will help protect your privacy and establish new boundaries between yourself and your ex.
3) Monitor Your Credit
Because you and your spouse’s finances were co-mingled, it’s a good idea to look at and monitor your credit report. It’s unfortunate (but not unheard of) for spouses to keep financial secrets from one another or to continue to use the personal information they have to open new credit accounts without your knowledge. You can get a free copy of your credit report here, and if there are any mistakes, each of the three major credit bureaus has steps you can take to fix them.
If you’re worried your former spouse may open credit accounts using your information, you can enact a credit freeze. Unfortunately, if you have joint credit accounts with your spouse, they can’t be closed until they’re paid off. You can, though, tell the credit card issuer to prevent future charges to that card.
5) Establishing New Insurance Policies: Health, Vehicle, Homeowners, and Umbrella
Most married couples share joint insurance policies as providers often offer discounts to married couples. Now that you will be starting fresh on your own, it will be important for you to look into coverages that meet your new needs. In some cases, updating your policies may reduce the cost, as well. For example, if your spouse received and removed many high-priced belongings in the divorce settlement, you may be able to reduce the cost of your homeowners policy by changing the “contents” coverage portion of your policy.
6) Check that QDROs are Filed
If you are entitled to share in your former spouse’s retirement benefits, you will have to get a separate order at the conclusion of your divorce called a Qualified Domestic Relations Order (QDRO) before you can receive anything from the pension or retirement account. The judgment of divorce by itself does not get you paid.
You want to ensure your ex-spouse files the QDRO in a timely fashion to ensure you receive your fair share of the assets in their retirement accounts. There are a number of terrible things that can happen if the spouse delays:
- They could retire and name their new spouse as the beneficiary.
- They could die prior to retiring.
- They could take a loan out against their plan.
- They could withdraw all the funds.
- They could roll funds into a different account.
Submitting a proposed QDRO to the court typically falls on the non-employee spouse, but sometimes it makes sense for the employee spouse to take the initiative.
7) Update Beneficiaries
You can only change your beneficiary designations on your accounts until your divorce is finalized. But once the ink dries, you need to contact your insurance companies, retirement plan account administrators, and banking institutions to update your wishes as soon as possible. If something happens to you post-divorce and your beneficiary designation is not changed, your ex-spouse could receive things like your life insurance proceeds or retirement account balance.
8) Review Estate Plans
First things first, set an appointment to go over your divorce decree with your estate planning attorney. He or she needs to know what obligations you have to your ex-spouse in the event of your death, particularly if you share children. Another major move here will be to update your Health Care Proxy and Power of Attorney if your ex-spouse was previously granted these roles. Remove your ex from all your documents and ensure your wishes are reflected in your documents.
9) File a Decree with the County to Record Name Change and Ownership on Property
Even if you are awarded property in your settlement, the divorce decree does not transfer this property from your ex-spouse. It only dictates how the assets will be divided. It is up to you and your ex to divide the property in the decree.
The spouse abdicating ownership of a property will likely file a quit claim deed to remove him or herself as an owner. However, some states required spouses to file a deed without warranty, so you’ll need to check your state’s regulations for changing property ownership.
10) Establish Your Own CPA, Estate Attorney, and Financial Advisor Relationships
If your divorce is supposed to be a clean financial break from your spouse, does it really make sense to continue using the same advisors as your ex? Or to establish a fresh relationship with someone new and has your best interest at heart?
At first, it may be comfortable to rely on the advisors who guided yourself and your spouse during the marriage; but as you move through the process, you’ll likely develop a keener sense of independence that will make working with new advisors more exciting than frightening.
There are a lot of boxes to check when it comes to preparing your post-divorce financial life for success. Enlisting the help of these professionals will make lighter work of the heavy load. As you put together your team, make sure all the members are able to work together to plan in the same direction for your fresh start.
Your Life Post-Marriage
Going through a divorce is a traumatic, painful, and expensive process for all parties concerned. Before the ink is dry on your documents, you need to get a clear picture of what your post-marriage life is going to look like. By following the above steps, you’ll be on your way to solid footing following this major life event.
Don’t forget to keep an eye on your finances by forecasting your expenses, getting a handle on your income, getting continued education or training if you need it, and forging a solid financial life for yourself as you enter your brave new world.
As a Certified Divorce Financial Analyst, I know and have seen the financial turmoil that can result from a divorce first-hand. In all honesty, these costly errors are what called me to earn my CDFA designation in the first place. Going through a divorce is difficult enough without compounding the experience with money trouble. I knew I could help people build better post-marriage lives by guiding them confidently through this traumatic time.
If you’re looking for a financial advisor you can trust who will help you create a road map for your solo financial future (and help you avoid common pitfalls along the way), I encourage you to reach out to me today by calling the office directly. I look forward to helping you move smoothly through this journey.
This information is for general purposes and is not intended to provide specific investment advice or recommendations. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. Individuals should always consult their own financial or tax advisor regarding their specific situation before acting on any information provided. Harbor West and Geneos Wealth Management, Inc. do not provide tax or legal advice.
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