One of my trusted partners, Arielle Brandt, Divorce Attorney, asked me to write an article on how to approach your finances before, during and after filing for divorce. If you are in this situation, please feel free to reach out to her/me for a no-obligation initial interview.
Getting a divorce is costly emotionally, time-wise and financially. While I can’t advise you on how to manage your time and your emotions before, during and after your divorce, I can advise you on a few steps on how to manage your finances.
As a financial planner, my role is to take the emotion/subjectivity out of the way and advise you on the best decision to make when the time comes. Through working together, our goal is to make sure that you and your family will be financially secure after your divorce.
Before filing for divorce, take the following steps.
First, gather all of your (and your spouse’s) financial statements including bank assets, retirement assets, any investment assets, life insurance policies, estate documents like Trust, Will, Power of Attorney etc… Sometimes it’s important to gather all your tax returns over the past 2-3 years.
Before announcing your divorce, determine what accounts you will be able to distribute and live off of once your spouse has been made aware of your intentions.
If you have been married for at least 10 years, you may receive Social Security benefits from your spouse. If you are approaching 10 years, consider waiting until you reach to that point to file for divorce.
Do not commit to any big purchases like a car, or a house for example.
If you apply for anything necessitating your credit being pulled (ex: credit card), make sure to do it under your name.
Factor in the cost of the divorce itself. Make sure to overestimate as extra expenses often arise.
Take the following steps during your divorce:
Keep track of all expenses. You don’t want to overspend during a divorce. You will need to take care of yourself, and your family.
You may notice your spouse spending more than usual; and this will need to be noted in court.
You may want to check your health insurance benefits at work and enroll if you were previously on your spouse’s plan.
Save, save, save — you never know what could happen during this process. You may also want to reduce expenses through stricter budgeting if possible. As a side note, I can help you determine an appropriate budget.
Open your own separate bank account(s) (checking and savings if needed) and start using them if advised by your attorney.
This is a huge change for your retirement planning strategy, so you should contact your advisor and start discussing your current situation. You may need to rebalance your overall portfolio in the short-term to face any kind of emergencies and market volatility. Once your divorce is settled, review your situation again with your advisor and start to implement your new financial plan.
Take the following steps after your divorce:
Consider updating your existing estate planning documents (Trust, Will, Power of Attorney, …) and let your trustees/beneficiaries know about it. Also, make sure you don’t have anything in common with your spouse anymore : such as property titles, bank accounts, insurance policies, investment accounts or any kind of debt.
You will want to review the way you file your taxes. You will no longer be able to use the « Married Filing Jointly » status; and therefore, your tax bracket may change. If you have questions regarding this topic, feel free to reach out to Arielle or me. We work closely with a trusted Certified Public Accountant (CPA) inside of our professional network.
Check that your ex-spouse is respecting what has been agreed upon during the divorce. If, for whatever reason, he/she is not following the guidelines set by the court, you may want to reach out to your Divorce Attorney for any potential legal actions.
The bottom line is: Arielle and I are both fully prepared to help you navigate these challenging times. So if you are in a similar situation and need financial guidance, please reach out to me for advice via the link below: