The financial aspects of divorce: ensuring you are prepared, educated and get what you deserve

1. Assess Your Current Financial Situation

• Document Assets and Liabilities: Create a list of all assets (real estate, bank accounts, retirement accounts, investments, business interests, vehicles, artwork, jewelry, etc.) and liabilities (mortgages, loans, credit card debt).

• Income and Expenses: Review your monthly income and expenses (bank and credit card accounts) for the past 6-12 months to get an idea of your current lifestyle and start thinking about what your ideal post-divorce budget will be.

2. Consult with a Financial Advisor and Attorney

• Legal Guidance: Hire a family law attorney experienced in divorce cases to understand your rights and obligations.

• Financial Advice: A financial advisor can help you understand the long-term financial implications of divorce, including tax consequences and retirement planning.

3. Understand the Impact on Taxes

• Filing Status: Your filing status will change, which could affect your tax liability. Consult with a tax professional to understand these changes.

• Division of Assets: Be aware of any tax implications of dividing assets, especially retirement accounts and investments.

4. Budget for Legal and Other Expenses

• Legal Fees: Divorce can be expensive, so budget for attorney fees, court costs, etc.

• Other Costs: Consider the costs of setting up a new household, including rent, utilities, and furnishings if you’ll be living separately.

5. Protect Your Credit

• Close Joint Accounts: To avoid being liable for your spouse’s debts, close or convert joint accounts once the accounts have been allocated by agreement with your spouse or pursuant to court order.

• Check Credit Reports: Regularly monitor your credit report to ensure there are no unauthorized transactions or new accounts.

6. Plan for Child Support and Alimony

• Child Support: Understand how child support is calculated in your state and plan for these payments.

• Alimony (aka Spousal Support and/or Maintenance): If applicable, consider how alimony payments will affect your financial situation and post-divorce budget.

7. Consider Your Living Arrangements

• Housing Decisions: Decide if you want to keep the family home, sell it, or move. Understand the financial implications of each scenario.

• New Housing Budget: Create a budget for your new living situation, including rent or mortgage, utilities, and maintenance.

8. Update Estate Planning Documents

• Estate Planning: Update your will, power of attorney, and other legal documents to reflect your new situation.

• Beneficiaries: Change beneficiaries on life insurance policies, retirement accounts, and other financial documents if necessary.

• Note: Consult with an attorney before changing any estate planning documents or beneficiaries, as the law in your state might prohibit it during divorce or require certain conditions be met before you may make changes.

9. Build an Emergency Fund

• Savings: Try to set aside an emergency fund to cover unexpected expenses, ideally, 3-6 months’ worth of your basic living expenses (housing, food, etc.).

• Insurance: Ensure you have adequate health, automobile, and home insurance coverage.

10. Plan for the Future

• Retirement Planning: Review your retirement plan and speak with a financial advisor about any adjustments you may want to make based on your new financial situation.

• Career and Education: Consider if additional education or career changes are necessary to support your financial goals post-divorce.

11. Emotional and Practical Support

• Counseling/Coaching: Consider therapy and/or coaching to help cope with the emotional aspects of divorce and to make sure you’re taking the right steps in the process. Therapy and coaching serve different purposes: therapy helps you heal and address trauma and other events stemming from your past, while coaching helps you create action plans to achieve your goals and desires for the future. For this reason, most clients of Kara Francis Coaching also have therapists to help support both aspects of their divorce journey.

• Support Network: Lean on friends, family, or support groups to help you through this transition. Set appropriate boundaries to protect your mental and emotional health, if necessary.

Divorce can be difficult and complex, and it requires careful planning and preparation, especially when it comes to finances. Taking the time to prepare financially and emotionally will help ensure that you can move forward with confidence and security. As the Rolling Stones sang on one of their best known hits:

You can’t always get what you want
But if you try sometimes, well, you might find
You get what you need!

Kara Francis Coaching offers financial goal setting strategies and emotional support to help you through this challenging time in your life. For a complimentary consultation, please contact Kara at: 708-586-5692 or feel free to fill out the form on the contact page.