After the dust settles, the tears dry and the anger subsides there will some important things to handle. As you begin your new journey you will now be completely responsible for your finances. This goes beyond paying your bills and balancing the checkbook.
You will have to plan and save for your future goals, college expenses if you have children and invest for your retirement. This can be terrifying and overwhelming, especially if you didn’t have much involvement in the finances while you were married.
This is not beyond you. You can do it.
If you take it a step at a time, while learning from good advisors along the way, you may find it tremendously empowering. Saving, tracking your expenses and living within your means are key – as well as seeking the advice of a comprehensive financial planner to ensure you invest properly.
A few initial steps are required to get you moving in the right direction toward a stable financial future post-divorce. Once the divorce is finalized, you will need to:
Update accounts – If you changed your name when you got married and are changing back to your maiden name you will have to go through the process of changing your name on all your accounts. This includes getting a new Social Security card, driver’s license, credit cards and passport. You will also have to notify your children’s schools, utilities, insurance companies and the bank of your name and/or address change. The titles of your assets such as house and car will need to be updated and the information forwarded to mortgage companies. A very important thing that is often overlooked would be updating the beneficiaries on any retirement accounts, investments or life insurance.
Create a comprehensive budget and plan – During the divorce, you most likely created a complete income/expense financial affidavit. This is a good place to start gathering information for your budget. You will want to continue tracking your day to day expenses to develop a short-term savings plan for your immediate as well as long-term goals. You will also need to create a long-term plan geared toward future expenses, such as college or retirement investing. If you received any lump sum settlement or alimony you will want to plan a solid strategy for managing these assets. The most important part of any budget is sticking to it and creating a long-term plan that provides a sense of security and peace of mind.
Establish or improve your credit rating – Without good credit you will have problems securing loans, signing leases and may even pay higher insurances rates. The best place to start is with a copy of your credit report. Check it over well for inaccuracies and address them. If you have credit cards in your name then using them and paying on time is a good start. If you have balances that are more than you can handle there are debt services to assist you in payment plans. Unfortunately, if you are unemployed and without established credit in your name, new federal regulations make it very difficult for women to build credit for themselves. It can be done but it will be a slow process.
Rely on the advice of a reputable financial planner – Your advisor should be experienced in financial planning for single women. As a divorcee, your needs will be different than those of a married couple. Everything from your budget to your retirement plan should be tailored to your individual situation, needs, goals and timeline.
At Edward Kennedy Mason women can seek the professional advice of a Certified Financial Planner who will work with her closely to establish an accurate budget, savings plan and investment strategy. Our services do not end there. We will continue reviewing the financial plan quarterly so that any changes in circumstance may be addressed as possible changes in the comprehensive plan.
Add to your team of experts – You will want to bring others in on your planning, such as a CPA and Estate Planning Attorney. These two specialists will work closely with your financial planner.
You may also seek the assistance of a life coach or therapist to ease the emotional stress of the transition or a vocational counselor if you will be entering the workforce.
“To Do” List:
- Obtain and make extra copies of your certified divorce decree.
- Close any joint credit accounts.
- Remove your husband’s name and change your name and/or address or on remaining accounts. These may include:
- Bank, brokerage and investment accounts
- Credit cards
- Driver’s license, automobile title, registration and insurance policies
- Life, health, homeowners and disability insurance policies
- Title to real property
- Utility bills
- If you moved, have your mail forwarded
- Employer’s records
- Professional licenses
- IRS records
- Social security card
- Obtain health insurance
- If your divorce marital settlement agreement requires
- A Qualified Domestic Relations Order (QDRO): You will need to provide this document to your specific financial institutions where appropriate. This may include brokerage institutions, banks, retirement plan administrators. (Even better, have this step completed before your divorce is finalized!)
- A quitclaim deed may be necessary with real estate. Proper execution and recording of this document is important. Be aware, quitclaim deeds may not be effective if your real estate is financed and jointly held on the loan. Other steps may be necessary per the settlement agreement such as refinancing or selling your home.
- The transfer of title to property (automobiles, boats, etc.): Complete the transfer by signing and delivering the necessary documents. Again, if loans are involved on such property it may require liquidation per your marital settlement agreement.
- Open a new bank account.
- Request a copy of your credit report
- Apply for a credit card in your name
- Write and execute a new will, trusts, medical directives and/or living wills and powers of attorney. Don’t forget to change the beneficiaries on your life insurance, 401k, pension and IRA accounts.
- Establish a tracking system for all child support made/received, alimony payments made/received, medical expenses, etc.
Once you complete the necessary steps, you will be on your way to establishing a solid financial foundation for your future. Stick to a budget, strengthen your credit rating and manage your assets. The future will be yours to enjoy.
This information is not intended to give specific recommendations, investment, legal or tax advice. Advisory services offered through Nepsis Advisor Services, Inc.; an SEC Registered Investment Advisor.