Suddenly single: Financial to-do’s for newly divorced individuals
Going through a divorce is an arduous process, and the thought of untangling joint finances seems like a daunting task. To minimize financial damage it’s essential to be proactive by promptly getting things in order. We’ve highlighted a few helpful financial to-do’s to cross off your checklist after a divorce:
- Put budgeting at the top of your list. When going from dual income to single income your expenses will be significantly different. The first thing you should focus on is your budget – determine what your new budget is, then you’ll have a better picture of your finances and can determine what you need to save and what debt you have to pay down.
- Restructure your debt. If you and your ex-spouse have combined debt, you’ll have to work together on a strategy for how to manage any withstanding debt. This can be a difficult situation and it may be best to have your attorney guide you through the process. You both will have to be prepared and willing to compromise on some things.
- Change beneficiaries. If you have your spouse elected as the beneficiary, update it to reflect any preferred changes. If you have a will and power of attorney, it’s a good idea to have all documents redrafted to ensure that the beneficiaries are who you want them to be moving forward.
- Meet with your team of advisors. Schedule meetings with your financial advisor, estate attorney and CPA. Your financial advisor will help to develop your new financial plan, your estate attorney to draft new documents and change beneficiaries, and your CPA to understand how your taxes will be affected by a divorce.
Life after a divorce will incorporate new financial goals and a revamped financial plan. It’s not uncommon for individuals to put things off when there’s a big change in their lives, but it’s essential to get your finances in order as soon as possible to prevent things from getting out of your control. Also, be sure to seek out advice from professionals who understand every situation is unique, and have your best interest in mind.