Going through a divorce is one of the most financially and emotionally stressful changes you can go through. You will need an army of emotional support as well as a good framework to help you make the financial decisions you will make.
Know that every situation is incredibly unique and while there are great online resources, consulting with a few financial law attorneys is essential, especially when children are involved. Divorce claims and processes also vary significantly from state to state. Therefore, knowing the local laws and regulations is a must.
1. Assemble essential advisors
One of the best places to start in managing your finances through a divorce is to assemble your experienced financial team. (Even mutually agreed-upon divorces benefit from some legal and financial advice to help the process along.) Consider meeting with a CPA about the tax implications of divorce, or possibly a Certified Divorce Financial Analyst who can help with issues like how to structure the division of marital assets.
If you are seeking legal help due to a tight financial situation, know that there are a number of resources you can turn to. Your local bar association can refer you to organizations that offer free services. Other websites like Law Help can also help you find forms and professionals in your area that are affordable options.
Source: The Slow Traveler
2. Make a financial checklist
When you hire your professional team, you need a clear picture of your finances. Consider working out a predefined checklist of all the aspects of your finances that you need to resolve through divorce. Using tools like this helps make the process a little easier during an emotional time. Resources like Divorce Net give you state-by-state instructions regarding marital property and a sense of how you expect to divide assets.
It's also wise to put alerts on your historically joint accounts. Possibly add text or email notifications to let you know when withdrawals or fees for a certain amount are due. This can lead to something you need to address with your partner. Regardless, make sure you have login and password information for all shared financial assets – from daily bank accounts to 401.000 to investment.
3. Manage beneficiaries
As part of your changing financial landscape, go through any policy or benefit portfolios where your spouse was once a beneficiary. This can include life insurance or even certain annuities. Update your will and make changes to legal documents or health insurance forms that include your spouse as an emergency contact or the person who can make medical and financial decisions on your behalf.
4. Get to know your budget
Now is a good time to be precise with your monthly budget. If you don't already use an app or money management tool to track your spending, start now. Information about your monthly income and routine shared expenses will become essential details in negotiating the division of marital assets and potentially justifying future support requirements.
Engage your financial professionals separately to talk about the types of expenses that may be involved in setting up your new life. It's easy to focus on the immediate needs of the current budget, but planning (and even saving) for the costs you'll soon incur yourself is another important consideration.
Source: Melissa Male
5. Be prepared for spousal support issues
Spousal support, especially when no children are involved, is generally considered rehabilitative. This means that it is generally only a short-term support, as long as the supported spouse needs to achieve a reasonable level of self-sufficiency. As women increasingly become the primary breadwinners, it's important to consider that you may be able to pay spousal support if you earn significantly more than your partner and a divorce dramatically changes their lifestyle. (Again, total income, education, and a number of other state factors come into play here.)
Some legal professionals state that the calculation of spousal support is to take up to 40% of the net income of the paying spouse (post child support), less 50% of the net income of the supported spouse (if he or she is employed) ). A careful review of household spending and total income will be an important part of handling spousal support requests.
6. Know your rights of withdrawal
Earlier divorce can (thankfully) give you more time to recover from retirement setbacks. While pensions are increasingly rare in the job market, they are almost always considered a joint marital asset that must be shared equally (read, not equally). After a divorce, you are usually not entitled to ongoing distributions from your spouse's retirement benefits.
If you've left investment planning primarily to your spouse, now is a good time to review the basics of retirement savings.
7. If you're exhausted, rest – don't stop
Divorce wears you out and involves countless emotional and financial lapses. You will inevitably hit a wall where you are willing to say yes to the offer or settlement on the table just to mitigate the process.
If you're looking for that moment, you can spot it in advance and take a little pause in negotiations, rather than rushing through what may not be the best financial decision for you just because that chapter is supposed to be over. Decisions you are working through right now have the potential to impact you (and your children's lives) for a long time to come. When the going gets tough (they will), take a break and reconnect with your tribe and advisors to revisit tough financial conversations with a fresh perspective.