Breaking Up is Hard to Do. Make Sure You’re Financially Prepared.
Statistics show a significant increase in online searches for divorce advice and a spike in the number of divorce filings after the holidays. Experts suggest this is because unhappy spouses postpone the inevitable in the interest of family celebrations or resolve to make a life change in the New Year. January has come to be known as ‘divorce month.’
Divorce exacts an emotional toll and can be financially frightening. For many women divorce creates additional challenges, depending on who the primary breadwinner was and/or who was in charge of the family’s finances.
If you’re thinking about divorce or have already taken the first step, there are things you can do to prepare.
Take control. If you’re not the one paying the bills or overseeing the financial plan today, it’s time to get involved. It’s important to have a clear understanding of your financial picture and be comfortable handling money, because once you’re divorced, you’ll be in charge. If you’re the one in charge of the finances today, be prepared to share the information.
Get organized. Gather all financial paperwork, including recent bank account statements, investment and retirement plan information, pay stubs, property deeds and tax returns, mortgage, credit card and student loan statements. You’ll need these documents to tell you what you and your spouse own and owe, jointly and separately.
Build your team. An experienced, knowledgeable and supportive team, including your wealth advisor and divorce attorney, can guide you through the process. A network of other divorced women, who have been through this before, can offer much needed emotional support. You don’t need to go it alone.
Develop a plan. Whether you’re going from two incomes to one, living off or paying alimony and child support, divorce affects your finances. Look at your past several years’ worth of expenses and think about where you may be able to make cuts. Work with your wealth advisor to re-evaluate your wealth strategy, which now should be based on only your age, circumstances, risk tolerance and objectives.
Change beneficiary designations. If you don’t want your ex-spouse to inherit your assets, remember to update the beneficiary designations on your financial accounts, including your life insurance policies and retirement accounts.
Don’t let divorce derail your finances. If you’re considering, experiencing or adjusting to divorce, join our upcoming Divorce Panel for valuable information and consult your Luma Wealth advisor for guidance.