Divorce is something that affects every area of your life – not only your relationship status but also the financial situation and living situation, or parenting roles if you have kids with your partner. However, many people don’t have any financial plan while getting a divorce, and they just let things happen, which is very risky in this kind of situation.
As the experts from Survive Divorce say – “The simple fact is you don’t know what you don’t know. That’s why it’s so important to get educated so you can make smart financial decisions before, during, and after divorce.”
Some of the financial matters that you need to take care of when you know that you are getting a divorce include…
Finding a Mediator
Having to deal with lawyers and the court system is burdensome – there’s no doubt. That’s why most experts would recommend hiring a mediator if it’s possible, instead of going through that. It might not be the cheapest thing to do, but it will definitely save you some nerves.
Tracking Expenses – Past and Future Ones
As soon as you know that you are getting a divorce, you should begin to track your household income and expenses. This will not only be essential for your attorney, but it also will help the judge, later on, to decide who gets what, and if they should assign child or spousal support. Furthermore, it will help you with planning your budget after the divorce is finalized.
It’s even better if you did that before – that way, you have records from the past few months or even years. However, if you didn’t, there’s nothing to worry about – you can just start doing it now. Remember to include all the household bills, clothing, entertainment, transportation, child care and everything else that you spend money on – you can do that by using your credit card and bank account statements. Also, think about your future expenses and plan them in advance.
You can use the reports from previous years as a template, but remember that circumstances change, especially if you have children. The money that you were spending four years ago on the child care, now you might be spending on extracurricular activities, or college tuition if your child is older. Also, while creating those reports, remember about the ‘one-time expenses’ such as holiday trips, or replacement of the appliances.
Removing Your Ex-Partner From Legal Documents
Divorce is the perfect opportunity to start from the beginning and give a fresh start. However, before that, you need to make sure your ex-partner is removed from legal documents like a will or trust. Also, check if the new information on the documents is correct. Look through everything carefully, and make certain that the people replacing your ex on the documents are added. After all, in case something happens, you don’t want your ex-partner to get the assets or rights that are not theirs to have anymore.
Modifying Your Beneficiaries
When getting a divorce, you need to take a look at all of the bank accounts, life insurance policies and retirement accounts that have a transfer on death. Often people don’t change them after a divorce but make sure that you do it so that your ex-partner will not get the money from them if something happens to you.
Considering Disability Insurance
Many people are reluctant to get a divorce as they are afraid that if something happens – like getting laid off or suffering from a financial setback – they will become financially vulnerable. One of the things that you can do to avoid that is considered disability insurance. Even though it’s usually not cheap, it will provide you with financial support in the form of a monthly ‘paycheck’ in case you become injured or ill, and you cannot work.
Not Forgetting About Social Security
If you were married for at least ten years, and never tie the knot again, you might qualify for higher Social Security benefits, based on your ex-partner’s income, even if they’ll get married again. If you’re thinking about walking down the aisle again, but you’re older and divorced, you might want to consider the impact that it will have on your Social Security. If you’ll get more benefits from your ex-partner, maybe it’s better to remain single.
However, if you’ll tie the knot again, but your marriage will end in less than ten years, you will still qualify under the previous marriage.
Divorce is always hard, especially since, throughout the whole process, you need to readjust almost every area of your life, including your finances. Many people don’t know what to do or how to take care of the financial part of the divorce, so they just let things happen.
The things listed above are just a few of those that you can do – there are many more. All you have to do is look for them, for instance, on the internet. Just like the experts said – educate yourself, and everything else should be fine.
