9 Financial Tasks to Take Care of After Your Divorce
Your divorce brings about all sorts of life changes: You are suddenly single, you’re spending less time with your kids, and you may have had to get a whole new place to live.
Divorce is an incredibly uncertain, tumultuous time.
It can also be a financially taxing time.
Protect yourself from the avoidable financial fallout of your divorce by taking some time to plan carefully and make necessary changes to your finances after your divorce. Here are the 9 most crucial tasks to tackle:
Cancel or Suspend Joint Accounts
If you were married for any length of time, chances are good that you had at least some sort of joint accounts. Bank accounts, credit cards, club memberships, or automatic subscriptions all will need to be canceled or suspended.
Start with the accounts that could have the most financial impact on you – credit cards and bank accounts.
Open New Accounts
Once you’ve closed your old accounts, you need to open new ones in your own name. This is especially true if you plan to look for a new place or get a new car anytime in the near future.
Open new bank accounts and apply for new credit cards to help yourself build up credit separate from your former spouse.
If you have a 401K, life insurance, or another investment account, you need to make changing beneficiaries a priority.
Think about it this way: If something unfortunate happens to you before you get the chance to change beneficiaries, your retirement accounts and life insurance benefits go to your former spouse instead of to your children or another family member who would better carry out your wishes.
This task doesn’t take very long, but it’s one that many people put off for too long or forget about entirely.
Update your Insurance Policies
Change your name (if necessary) and contact information, and remove your ex’s information off the policy.
If you listed assets on your homeowner’s insurance, double-check that you still retained all that property – including jewelry, artwork, or collectibles – following your divorce.
Check Your Credit Score
If you and your ex lived apart for a while, there’s a good chance that property could have been bought or loans taken out without your knowing. Make sure that these haven’t negatively impacted your credit score, and work with a financial counselor if you have some repair work to do.
You can get one free credit report per year from each of the three major reporting agencies – Equifax, Experian, and TransUnion – so put these free reports to good use.
Your home, car, or other assets may have been titled in both your and your spouse’s name during your marriage.
Now that you’ve divided up those assets, you need to get titles for the property you kept issued in your name only. This prevents you from having to be involved with your ex if you want to sell the property in question, which can cause more headaches than you need.
Run New Tax Projections
Given your newly single state, your tax liabilities and withholdings likely have changed. You can take fewer exemptions, for example, and you may not be able to claim your children as dependents on your tax returns.
Work with an accountant to run new tax projections so you take the correct number of exemptions and avoid taking too many and then owing money at the end of the year.
Update Your Estate Plan
Like beneficiaries on financial assets, updating estate plans often gets forgotten in the long list of tasks that come with a divorce.
Visit an estate planning lawyer and update your will, trust, powers of attorney, and other estate planning documents to reflect your new life situation.
Shore up Your Finances
Now that you’re single, you’re far more vulnerable to the ebb and flow of your financial situation than you were when you were married.
A job loss, expensive repairs on your home, or an illness can quickly drain any savings you may be able to build up. To minimize the toll these situations may take on your finances, consider creating a financial safety net for yourself.
Set up an emergency savings account and aim to save, over time, several months’ worth of living expenses. You also may want to consider taking out a disability or critical illness insurance policy on yourself to help pay bills in the event you get ill or injured.
Experienced Divorce Attorney in Washington, D.C.
Your divorce can leave you feeling uncertain of the future and rushing to put your life together. You need an attorney who can guide you through the process, helping you figure out a way to move forward. At Lopez Law Firm, our team helps you from the moment you decide to get a divorce all the way through any post-judgement modifications. Schedule your consultation today!