Just divorced? Here’s what to do next to take care of your money
Getting your financial house in order as you prepare for your new life
You and your divorce lawyer may have finalized all the paperwork, but there may still be loose ends to tie up. Use this post-divorce checklist to help you finish the financial-related tasks as you move on.
First, the basics.
Plan how you’ll spend and save your money based on one income. Don’t forget to set aside 6 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.
Assemble a helpful network. You have a divorce lawyer. Now line up a financial advisor and tax professional.
Next, tackle the more complex stuff.
Often a simple form is all you need to update beneficiaries. Make sure coverage is adequate for your children.
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 settlement and any paperwork they request. If you need some of the money now, find out about any tax laws regarding withdrawals from a 401(k) account vs. an IRA.
Retitle assets in your name. If you’ll refinance, start the process.
File COBRA documents to extend your 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 though, so start planning now for health coverage once COBRA runs out.
Look at what’s on your homeowner’s coverage, such as jewelry, collectibles, artwork, and other valuables. Do the same with your vehicles.
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.
Finally, plan for your future.
Your accountant can run new projections based on your income and deductions, and help you decide if you need to change your withholding.
A financial professional can help you figure out how much to save for retirement, and what adjustments to make.
Set target dates for completing each of these sections and make it happen. Then take some time to focus on you and the next phase of your life.
Want to keep track of your progress offline? Download a printable version of this checklist (PDF).
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