Woman with her son who has gotten her finances in order after a divorce.

A 3-step divorce checklist to help you manage your money during a difficult transition

Get your financial house in order as you prepare for your new life.

You and your lawyer may have finalized the paperwork, but there may still be financial loose ends to tie up when you’ve gone through a divorce.

To start, says Jenny Smith, financial professional at Principal® in Des Moines, Iowa, your beneficiary designations probably need to be updated. “Also, make sure your savings is on track, so you’re projecting for a long-term goal and working toward it. What you’re doing today should help accomplish that goal.”

Use this divorce checklist to help you finish other financial tasks as you move on.

Photo of a PDF version of this webpage.

Want to keep track of your progress offline? Download a printable version of this checklist (PDF).

1. Start with the basics.

Budget

Plan how you’ll spend and save your money based on one income. Set aside six months of living expenses in a bank account as a safety net. If you have unexpected expenses (hello, car repairs) or are temporarily without a job, the extra cash reserve will come in handy.

Banking, investments, and credit

Close joint accounts, open new ones in your name, and check your credit score after the divorce to resolve any errors. Discrepancies can impact your ability to get credit or result in a higher interest rate. It’s also good practice to change passwords for your online accounts.

Your ‘team’

Assemble a helpful network. You have a divorce lawyer. Now line up a financial professional and tax professional.

2. Tackle QDRO and other complex stuff.

Life insurance and annuity policies

Often a simple form is all you need to update beneficiaries. Make sure coverage is adequate for your children.

Retirement accounts

Update beneficiaries on retirement accounts. To split a workplace retirement plan like a 401(k), 403(b), or a pension plan, you’ll need a court-issued document called a qualified domestic relations order (QDRO). Retain a copy and follow up on payouts or transfer of assets according to the divorce agreement. To transfer IRAs or other retirement accounts, provide the financial institution with a copy of the divorce settlement and any paperwork they request. If you need some of the money now, discuss tax laws regarding withdrawals from a workplace retirement plan vs. an IRA with your tax advisor.

Mortgage

Retitle assets in your name. If you’ll refinance, start the process.

"Keep your new budget top of mind,” Smith says when it comes to housing cost after divorce. “So often women want to keep the family home for their kids’ security. But most of the time they struggle to afford it. It can put your retirement at risk.”

Health insurance

File COBRA (Consolidated Omnibus Budget Reconciliation Act) documents to extend your health coverage if you don’t have your own policy. COBRA helps ensure you don’t have to use other savings for unexpected medical expenses. It’s not a long-term solution, so start planning now for health coverage once COBRA runs out.

Property/casualty policies

Look at what’s on your homeowner’s coverage, such as jewelry, collectibles, artwork, and other valuables. Do the same with your vehicles.

Will and estate planning documents

Talk to an estate-planning attorney to create or update your will, healthcare, and financial directives. You’ll want your wishes carried out, and to take care of those who matter most to you.

3. Plan for your future.

Taxes

Your accountant can run new projections based on your income and deductions and help you decide if you need to change your withholding or make estimated tax payments. Remember: Since the start of 2019, alimony or separation payments made to a former spouse under a divorce agreement entered into after 2018 aren’t tax deductible.

Financial plan

A financial professional can help you figure out how much to save for retirement, and which adjustments to make.

Set deadlines for completing each of these sections on your divorce checklist and make it happen. Then take some time to focus on you and the next phase of your life.

Next steps

  • Got a financial professional? They can help you navigate the financial steps of divorce. If not, find one near you.
  • Have a retirement account from your employer with service through Principal®Log in to principal.com to review what you might need to adjust after divorce. First time logging in? Get started.

Insurance products issued by Principal National Life Insurance Co. (except in NY) and Principal Life Insurance Co. Securities and advisory products offered through Principal Securities, Inc., 800-247-1737, Member SIPC. Principal National, Principal Life and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392.