Your Divorce is Finalized - Now What?
The judge has signed off and you are officially divorced. This was likely an emotional process, but before you take a sigh of relief there are probably still important action items to take care of. Of course, every situation is unique, but the following are some common financial items to think about after your divorce is finalized.
Dividing/Transferring Assets – This seems like a no-brainer, but many times 401(k)s or other accounts are left lingering without being disposed of, especially if a Qualified Domestic Relations Order (QDRO) is required.
New Accounts – Do you need to open any new accounts to receive assets that will be split or to retitle any of your current accounts? Do you have linked accounts or standing transfer instructions on file with certain accounts that you would no longer like applied? Do you have a direct deposit that needs updating? Taking a fresh look at your various accounts can also serve as an opportunity to open a savings account if you don’t already have one and start building an emergency fund.
Review Your Cashflow and Budget – You have likely done some work around cashflow and expenses throughout the divorce process, which is a good thing because this area can be a difficult shift for several reasons. First, after the divorce is finalized, the likelihood is high that changes will occur with income coming in and expenses going out. Second, you may now have to adjust to a different level of available assets, which increases the need to track expenses and possibly be more diligent about following a budget going forward. Finally, a move may be involved – selling a house, purchasing and relocating to a new house, downsizing, or renting an apartment. The key here is recognizing that it takes time to get comfortable with the financial changes, regardless of how big or how small, and to work through your new budget and spending goals.
Rename Beneficiaries – Do not forget to update the beneficiaries named on your retirement accounts, pension or employee benefits, and life insurance policies (unless the divorce agreement stipulates otherwise). You likely no longer want your former spouse to be the primary beneficiary.
Insurance Coverage – Will you need different health insurance down the road? If you are covered by COBRA, when does it expire and when do you need to revisit your health insurance options? Typically, after a divorce you have 36 months to remain on COBRA, however this coverage can be expensive and a more cost-effective option may be available depending on your health and desired level of coverage.
Take a Fresh Look at Your Tax Situation – Spend some time understanding what filing status will be most beneficial for you going forward and what impact that may have on what you owe.
Update Your Estate Plan – It’s likely that where you want your money to go after you are gone has changed along with your marital status. Meet with an estate planning attorney to revisit your will or trust document.
Redesign Your Future – What do you want your future financial picture to look like? How have your goals and aspirations changed? Does this affect how you should save and spend, or when you might retire?
Review with Your Team – Take a second look at your entire situation with your attorney, financial advisor, and tax professional to check that you have crossed off all the to-do items on your list.
As you embark on life post-divorce Copper Leaf Financial can assist you and help you get organized. With offices in Rutland and Williston, Vermont Copper Leaf Financial develops a customized wealth management plan designed to integrate every aspect of your financial life. Our approach is to provide clarity and calm amidst the chaos. Where there is uncertainty, we look for facts. We call our approach evidence-based investing. Call us today at 802-878-2731 to schedule a strategy session and begin building your road map to financial success.
To read the full article from Buckingham Strategic Partners please click here.