Divorce Planning Basics: Protecting Yourself Financially
Divorce impacts your finances. Preparation protects your assets and future. This guide covers key steps to safeguard your financial well-being during divorce.
Understand Your Current Financial Situation
Begin by gathering all financial documents:
• Bank statements
• Investment accounts
• Retirement accounts
• Insurance policies
• Tax returns
• Mortgage statements
• Credit card statements
• Loan documents
Create a comprehensive list of assets and liabilities. This provides a clear picture of your financial standing [1].
Establish Financial Independence
Open individual bank accounts and credit cards in your name. This separates your finances from your spouse's [1].
Build an emergency fund to cover unexpected expenses during the divorce process [8].
Assess Your Income and Expenses
Calculate your current income and expenses. This helps determine your post-divorce financial needs [7].
Create a new budget based on your individual income and anticipated expenses after divorce [1].
Protect Your Credit
Check your credit report for accuracy. Address any discrepancies [8].
Close joint accounts or remove your name from shared accounts when possible [5].
Consider Tax Implications
Divorce changes your tax filing status. Understand how this affects your tax liability [10].
Review the tax consequences of asset division, especially for retirement accounts and property [3].
Update Beneficiary Designations
Review and update beneficiaries on:
• Life insurance policies
• Retirement accounts
• Investment accounts
• Estate planning documents [8]
Seek Professional Guidance
Consult a financial advisor experienced in divorce planning. They help navigate complex financial decisions [7].
Work with a divorce attorney to protect your legal and financial interests [1].
Plan for the Future
Develop a long-term financial plan. Include goals for:
• Saving
• Investing
• Retirement
• Debt management [8]
Negotiate Wisely
Prioritize assets with the highest after-tax value during negotiations [3].
Consider the long-term financial impact of keeping the marital home versus other assets [3].
Protect Your Business Interests
If you own a business, obtain a professional valuation. This ensures fair division of business assets [2].
Conclusion
Divorce planning protects your financial future. Start early and seek professional guidance. This approach safeguards your assets and sets you up for post-divorce financial success.
Meet
Erin Niehaus
Hello 👋🏼 I'm Erin. I became a CFP®, because I knew too many people who made money mistakes in dealing with death, divorce and compensation choices that could have been avoided with a trusted financial advisor and proper planning.
Divorce Planning Basics: Protecting Yourself Financially
Divorce impacts your finances. Preparation protects your assets and future. This guide covers key steps to safeguard your financial well-being during divorce.
Understand Your Current Financial Situation
Begin by gathering all financial documents:
• Bank statements
• Investment accounts
• Retirement accounts
• Insurance policies
• Tax returns
• Mortgage statements
• Credit card statements
• Loan documents
Create a comprehensive list of assets and liabilities. This provides a clear picture of your financial standing [1].
Establish Financial Independence
Open individual bank accounts and credit cards in your name. This separates your finances from your spouse's [1].
Build an emergency fund to cover unexpected expenses during the divorce process [8].
Assess Your Income and Expenses
Calculate your current income and expenses. This helps determine your post-divorce financial needs [7].
Create a new budget based on your individual income and anticipated expenses after divorce [1].
Protect Your Credit
Check your credit report for accuracy. Address any discrepancies [8].
Close joint accounts or remove your name from shared accounts when possible [5].
Consider Tax Implications
Divorce changes your tax filing status. Understand how this affects your tax liability [10].
Review the tax consequences of asset division, especially for retirement accounts and property [3].
Update Beneficiary Designations
Review and update beneficiaries on:
• Life insurance policies
• Retirement accounts
• Investment accounts
• Estate planning documents [8]
Seek Professional Guidance
Consult a financial advisor experienced in divorce planning. They help navigate complex financial decisions [7].
Work with a divorce attorney to protect your legal and financial interests [1].
Plan for the Future
Develop a long-term financial plan. Include goals for:
• Saving
• Investing
• Retirement
• Debt management [8]
Negotiate Wisely
Prioritize assets with the highest after-tax value during negotiations [3].
Consider the long-term financial impact of keeping the marital home versus other assets [3].
Protect Your Business Interests
If you own a business, obtain a professional valuation. This ensures fair division of business assets [2].
Conclusion
Divorce planning protects your financial future. Start early and seek professional guidance. This approach safeguards your assets and sets you up for post-divorce financial success.
Meet
Erin Niehaus
Hello 👋🏼 I'm Erin. I became a CFP®, because I knew too many people who made money mistakes in dealing with death, divorce and compensation choices that could have been avoided with a trusted financial advisor and proper planning.
