Dealing with Divorce
Parting ways with a spouse can be stressful and challenging, and navigating the process requires careful planning.
Parting ways with a spouse can be stressful and challenging, and navigating the process requires careful planning to answer questions like: Where will you live? How will this affect your children? How will the divorce impact your financial future?
These questions may lead to difficult conversations, but they’re worth having, no matter how overwhelming the prospect of life on your own may be. The answers will help you better navigate the legal, financial and emotional issues to come. Start by building a team that will see you through the emotional aspects and keep your best interests top of mind.
Consult Your Financial Advisor
Your financial advisor is available to work with your team of professional advisors to help protect your interests. He or she can provide invaluable guidance when it comes to getting organized, estimating spousal and child support needs and sorting out the future value of retirement assets.
Find a Shoulder to Lean On
Divorce involves loss, uncertainty and upheaval – even when it’s something you both want. It’s best to have someone you trust to talk things out.
Gather Important Documents
When you consult a lawyer or a financial professional, bring the documents they’ll need to help you assess your situation.
- Prenuptial agreements
- Estate plan documents
- Bank, brokerage, credit card and retirement account statements
- Business ownership and financial/tax records
- Life, health and disability insurance policies
- Tax returns for the past five years
- Mortgage or home equity loan documents
- Outstanding bills or obligations
- Real property deeds
- Motor vehicle titles
- Credit reports
- Current income and expenses
- Pay statements for you and your spouse
- Loan applications and related personal financial statements
- Personal property documentation for valuable assets
- Wills, living wills, powers of attorney, trust documents
- Inventory of sales and safe deposit boxes
Sure, relationships aren’t all about money. But too many allow the emotional aspects to overwhelm the practical ones. Instead, approach and address these important topics in an objective manner.
Create cash flow. Liquidity can be essential as you think about hiring a lawyer, moving out, etc. Make sure you’ll have enough cash to cover your expenses throughout the process.
Develop a budget. List your current income and expenses, then work with your financial advisor to develop a spending plan until the divorce is final and get an estimate of what your post-divorce income may look like.
Be vigilant about your credit. If you don’t already have one, open a credit card in your own name and use it wisely. Keep tabs on your credit score, too.
During negotiations, compromise and civility are key; however, don’t agree to anything without first considering the long-term implications.
Approach negotiations with the right frame of mind. Seek a fair and equitable settlement. Your financial advisor can help you determine which assets are the most valuable to you and help you avoid settling for less.
Divide assets. Even short marriages accumulate quite a bit of joint assets. It’s important to identify those that should be part of a fair and equitable distribution.
Divide the business. A jointly owned business can be a sticking point in a divorce. Ideally, you’ll already have a tentative plan in place that separates the personal from the professional and ensures the continuity of the business.
Be smart about housing. Experts caution against automatically choosing the house over other assets. Determine whether you can afford its current and future costs, including insurance and property taxes.
Deal with debt. Come to an agreement about who will pay the mortgage and other ongoing bills until proceedings are final. Stay current on all bills to keep from damaging your credit.
Know your retirement options. You may have a right to a portion of your spouse’s pension benefits, retirement assets, company stock options and other types of deferred compensation.
Read up on Social Security. If you’ve been married at least 10 years, you could be eligible to receive half your spouse’s benefits. Visit ssa.gov for more information.
Planning Your Future
Taking the time to plan for your new life can help make the transition much smoother and ensure that divorce does not derail your financial plan.
Get a handle on your finances post-divorce. It’s time to reassess your investments and financial plan to ensure it’s aligned with your new goals. Your financial advisor can help with budgeting, cash flow, financial goals and making the most of your settlement.
Establish your new identity. If you submitted a name change request with your divorce petition, make it official. Once complete, don’t forget to notify your employer, Social Security Administration and the Department of Motor Vehicles.
Standing on Your Own
It can be difficult to picture what life will be like after a divorce, but your financial advisor can help you see the possibilities more clearly and help you make decisions that align with your goals.