Once the divorce is finalized, what’s next? With all the work and coordination involved in untangling the marriage and the finances, it might be tempting to consider things done once the Final Decree is entered. However, in order to ensure success post-divorce, consider these four steps.
Develop a post-divorce financial plan.
While many people don’t want any further disruption to their children or their life, it’s important to consider your new financial picture. It almost inherently takes more to maintain two households than one and it could mean a change in lifestyle is required. That could be selling the existing home and moving to a more affordable option on your new single income. Ensure that final settlements are based on accurate post-divorce budgets and be realistic about what that will look like.
Update estate documents.
Start by revoking your will and making a new one – literally tearing it up is the best way. If you don’t have a will, now is certainly the time to make one. The new will should leave your property to the people of your choice, appoint an executor and nominate a guardian for any minor children if it’s ever necessary. You’ll also want to update beneficiaries on life insurance policies, retirement accounts, pay-on-death bank accounts and transfer-on-death brokerage accounts. Make new Powers of Attorney. Don’t assume that the law (or even the Divorce Decree) will revoke any previous designations. Take matters into your own hands and ensure that your estate would be handled as you would like.
Insure the divorce settlement, if applicable.
In cases where one spouse is providing alimony and/or child support to the other spouse, life insurance is beneficial to ensure that should the primary earner pass away, there would not be a financial burden on the ex-partner. Many times, this insurance is ordered as part of the Court’s final orders (Divorce Decree). When receiving alimony and child support, one of the biggest mistakes that parties make is failing to verify that the policy is active, and remains active with premiums paid.
Continue working with a team of professionals.
Accountants, estate planning attorneys and other financial advisors can help you understand where you are financially and can advise on next steps. Having an independent financial life doesn’t have to be intimidating. In fact, it can be a great opportunity to direct your money on your own terms.
Steve Walker is a CPA with over 30 years accounting, tax, valuation, and forensic accounting experience. His practice focuses exclusively on family law matters in the areas of collaborative divorce, litigation support, and forensic accounting with an emphasis on characterization and tracing of separate property. Mr. Walker has completed over 200 collaborative divorces since 2006.