Divorce has a profound impact on every aspect of a person’s life, especially financially. All decisions you made about the present and future with your former spouse are altered by the financial elements of a divorce settlement, from child support to spousal support to sharing debt. Working with an expert after divorce for financial planning will help you regain confidence and clarity about your financial future.
Adjust to a Different Financial Picture
Your new financial reality and responsibilities are an adjustment after divorce, whether you’re paying out to your ex or receiving payments. The financial world you were used to has changed, which means your approach to financial matters must shift too. Your financial picture needs to include accurate information about earnings, expenses, spending, and what you owe divorce-wise. A financial planner will help you reach a place of organization and confidence in a time of chaos and help you avoid financial surprises or pitfalls so you can maintain an effective financial strategy.
- Evaluate income, from wages to support.
- Itemize expenses, including fixed and flexible costs and one-time spending.
- Be honest about all financial responsibilities.
- Establish, own, and follow your new budget.
- Be prepared to make hard choices to reach financial goals.
Review and Update Key Documents
Income and expenses can change after a divorce as properties are sold, children come of age, or someone remarries. Adjustments will need to be made from time to time and having set but fluid financial plans can aid you in weathering every storm. It’s also essential to update key legal and financial documents to ensure your ex-spouse is no longer listed (or remains in place, as the case may be).
- Estate planning documents. Adjust your estate planning choices to accurately reflect guardians, bequests, trustees, power of attorney, and healthcare directives with the people you trust in decision-making roles.
- Beneficiary information. Review life insurance accounts for accuracy and change who is earmarked to receive assets in the future, if necessary.
- Contributions. As you rebuild your wealth after a divorce, it may be necessary to temporarily change contributions to things like savings plans of 529s for your child’s education.
Set New Financial Goals
Because retirement accounts are considered assets during a divorce and are divided accordingly, there will be changes to Social Security and pension plans that you need to consider when it comes to total assets and short- and long-term financial goals. In this time of change, it helps to have a financial planner on your side who can guide you toward safe choices at a time when risk feels like too much or give you room to venture into fresh territory depending on your wealth and mindset.
You don’t need to make significant changes to how you approach your assets after a divorce, but it is necessary to consider what means the most to you right now, the financial choices you must make, and how it can all work toward the development of a healthy financial future.
Divorce is an emotional minefield and a financial challenge, but financial planning with an expert at Hollander Lone Maxbauer in Southfield, MI, while in the middle of a divorce or immediately after ensures that you have the professional financial help needed to navigate the next phase of life. Contact us to schedule a consultation.
