By: Josh Slocum, McClellan Wealth Management
During the divorce process, most couples tend to focus on aspects like asset division, child custody, and ultimately, getting what they feel they deserve.
What many often overlook during this stressful time is the financial impact of divorce, and the steps they should consider taking to protect themselves financially, both during and after the process.
3 Financial Aspects to Keep in Mind During a Divorce
#1: The Financial Impact of Divorce
The reality of divorce often means the standard of living may be reduced dramatically for one or both spouses. Depending on the judge’s decree; wants, needs and disposable income may look very different from what both parties have become accustomed to.
A settlement will usually include enough to pay bills and child support, but more often than not, you can expect to see your standard of living shift. If you don’t have a well thought out financial plan, now is as good a time as ever to consider partnering with a financial advisor.
I personally tell my clients who are going through a divorce to create a list of expenses and income streams, and adjust accordingly. It’s important to consider things like retirement savings, and if you have children, college funds.
It’s often helpful post-divorce to consult with your financial planner to get a big picture of what your new life looks like. A planner can work with you to strategize new financial goals and help prepare for the future.
#2: Keep an Eye on Credit Cards and Credit Scores
Emotions and tension can run high and result in one partner inflicting financial harm out of spite. Since each party will be liable for any debts incurred, I advise my clients that it may be best to close these accounts to minimize any risk to their personal credit during this time.
You may want to request a copy of your credit report so you know where you stand and can keep an eye out in case anything is taken out in your name.
When it comes to joint bank accounts, of course, an attorney can advise on how to best divide these funds in order to protect your assets during divorce.
#3 Review Estate Plans and Wills
It’s easy for anyone to get caught in the here and now in divorce proceedings – but keep in mind the importance of any updates to your estate plans, wills, insurance policies, and the division of retirement funds.
Especially when children are involved, it’s important to come up with a plan to ensure the child’s wellbeing if something were to happen to either spouse post-divorce. Unfortunately, this step can get overlooked, and it’s the child who pays the price.
Often, an attorney can best advise on changing beneficiaries on life insurance policies and filling out medical power of attorney forms.
Consult with McClellan Wealth Management in Birmingham, AL
When going through a divorce, you have enough on your plate. Adding one more aspect to think through can be overwhelming.
But with finances, current and future, playing such a crucial role in the divorce process, it’s often a smart move to team up with a financial advisor you trust.
That’s where McClellan Wealth Management may be able to help. Our team of financial professionals can help you through the financial aspects, and ultimately, help re-establish your new life.
If you’re going through a divorce and interested in pre- or post-divorce financial planning, give me a call today at (205) 208-9868 or shoot me a message online. If you know me, you know I’m always happy to talk and help any way I can.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation. Advisory services offered through McClellan Wealth Management, a Member of Advisory Services Network, LLC.