People can sometimes get nasty during divorce, and you might see sides of your former partner’s personality that you never thought you’d have to deal with. A lot of that nastiness arises during discussions of money and the valuables you once owned together, things people sometimes feel possessive about during the divorce negotiations. If you’re going through a divorce, it’s never too early to analyze your investments and create a financial plan and budget for your future. But before you think about the future, you have to think about the past and protect any wealth you have already worked hard to acquire.
Here are a few facets of your financial situation that are important to think about as you move forward with your life:
Bank Accounts: According to DailyFinance.com, one of the first things you should do once you are divorced is ensure that you have all your own bank accounts, whether that means opening up entirely new accounts or simply ensuring your existing accounts are in your name only. If you don’t have one already, getting a credit card in your own name should be considered paramount, especially to help you adjust in the short term. If you have an outstanding balance on a joint credit card that you are unable to pay off immediately, you can call the credit card company to tell them not to allow any future payments on the card.
Insurance: Married couples often receive insurance discounts, so it makes sense to combine contracts at first, but after divorce, things can get confusing. For your health insurance, under a COBRA plan, you have the right to coverage if you are legally separated, but not if you are divorced. Other insurance policies to examine include homeowner’s or renter’s insurance, car insurance, and life insurance.
Beneficiaries: Evaluate your named beneficiaries to make sure none of them are your ex-spouse or his or her family members. While it might not seem like an immediate concern, changing the beneficiaries on your 401(k) and your IRA is one of those tasks that often gets put on the back-burner during the chaos that is divorce paperwork and the emotional rollercoaster you’ll be riding.
Safety: Having a safety account is always a good idea; especially during divorce proceedings. This isn’t a hidden, secret Swiss account that you can use when you run away, it’s simply an account you can add to and withdraw from without having to worry whether your former partner is partaking in what belongs to you.
Taxes: First, keep in mind that a 50/50 split in assets might not be 50/50 after taxes are evaluated. Speak with a tax professional to ensure you are getting a fair deal in the settlement, and remember, when tax season rolls around, you and your ex may still be on the same side for that particular challenge. Be sure to keep copies of everything related to major purchases and finances, even if you are not sure whether they still have anything to do with you. That way, when it’s tax time, you’ll have all of your bases covered should an issue arise.
Other Income: In addition to accounts that directly involve money you already have, consider the value of indirect sources of money—whether that involves income or anticipated savings. Some commonly overlooked concerns include insurance that was paid for ahead of time, tax refunds, and even frequent flyer points.
Bills: On the flipside, you and your former spouse probably have several joint billing accounts that you pay into monthly, quarterly, or yearly. Look through your records for memberships, subscriptions, and even items that often are forgotten, like EZPass or your state’s toll payment provider. Some people prepay for items out of joint accounts before filing for divorce, while others may simply not worry about future liability, leaving the responsibility on you.
Divorce proceedings are often tedious, and losing that part of your life can be painful, but staying in charge of your financial future is a great way to create some security in your life. Protect yourself from unfortunate financial surprises by looking into what might seem like tiny details before they become big problems.