By: Josh Slocum, McClellan Wealth Management
In the early stages of divorce, there’s no doubt that emotions and stress are running high. These intense feelings may lead to clouded judgement and forgetfulness – not exactly what you need when trying to make decisions that are likely to impact the rest of your, and your family’s, lives.
Divorce Financial Planning Checklist: What I recommend doing before and after divorce
In order to make sure you’re covering all your bases, you may want to consider walking through the checklist below before and after the divorce process. Getting your finances in order before the process begins may be a smart move that you’ll thank yourself for later.
Divorce Preparation Checklist – Getting a Plan Together Before Divorce
#1 Schedule a meeting with a divorce attorney and get educated.
You’ll very likely need an advocate who knows how the process works. Be prepared to discuss your current financial situation. You’ll also want to begin discussions on alimony, child support and the division of assets.
#2 Take inventory of you and your spouse’s assets and gather information.
- Begin by organizing important documents and consider making photocopies of items such as:
o Birth certificates, Social Security cards, passports and driver’s licenses. If a last name change is under consideration, you’ll need this information to legally change it.
o Bank account and retirement plan statements
o Insurance policies, including life, health, homeowners and renter’s insurance. Auto, boat and RV policies, if applicable.
o Tax returns from the last five years
o Any outstanding bills or upcoming obligations
o Property deeds and vehicle titles
o A list of household goods, including assets stored in safes or safety deposit boxes
- Make a list of all income and expenses. You need to know where you are currently at financially in order to create a new financial plan for going forward.
- Check with your attorney on closing any joint banking accounts and credit cards. He or she can advise on how best to divide these funds. They may recommend placing assets from a closed checking account into an escrow account until the divorce is settled.
- Close any shared credit cards. Each party will be liable for any debts incurred, so it’s best to close these accounts and minimize the risk to personal credit during this period.
- Freeze joint brokerage accounts. Your attorney can recommend the best course of action for this. A court order may be required for this to occur, as joint accounts usually grant both parties equal access. Additionally, notify your consultant in writing that you are separated.
- Begin thinking about the division of retirement plans. Ask your attorney and financial planners for their advice on pension, retirement plan and 401(k) compensation.
- Consult with your attorney on changing beneficiaries on life insurance policies. Also check to see who has medical power of attorney.
- Request a copy of your credit report. This way, you’ll know where you stand before the divorce and can keep a watch on it.
Post-Divorce Financial Planning Checklist
- If you wish, start the process to change your last name. You’ll begin the process with the Social Security office. Once legally changed, you’ll also want to change the contact name on:
o All utility bills
o Insurance policies
o Credit and debit cards
You’ll also want to contact your bank and employer to ensure they’re aware of the changes.
- Review wills and estate plans. Now is the time to make changes on any wills or estates you have in place.
- Consult with your financial planner and accountant on a new tax filing status. You may have options to file as “head of household.” If this is the case, you’ll need to update your W-4 with your employer.
- Consult with your financial planner on investments that fit your new lifestyle. He or she can help you identify goals for the future and set a plan to meet them.
McClellan Wealth Management is here to help through the stress and difficulties of divorce. Working with our team of professionals, we can help guide those going through the process and ultimately re-establish their new life.
Call us today at (205) 208-9868 or contact us online.
Click here to download a printable version of the checklist.
This material is provided as a courtesy and for educational purposes only and is not intended to be relied upon as specific investment advice and is not a recommendation, offer or solicitation to buy or sell any security. Investing involves risk including loss of principal. Before investing or using any strategy, individuals should consult with their tax, legal, or financial advisor. The opinions expressed here are those of the author and not Advisor Services Network, LLC.