Everyone reading this has either experienced a divorced, or knows someone who has, and understands that, both emotionally and financially, it is a stressful and complex undertaking.
When it comes to the unfortunate process of divorce, our experience has been that one partner tends to take the lead in financial decision-making. This means that, after the divorce is final, the other partner may find themselves, due to a lack of professional guidance or unfamiliarity with the process, regretting the decisions they made during the divorce, while also being tasked with making crucial, long-term financial decisions for the first time.
To protect yourself, and experience the best possible outcome after the divorce, here are six key financial considerations to consider before all the paperwork is final.
Sometimes it’s as simple as knowing precisely what the things are that you won’t compromise on, and being comfortable with the things you will.
For example: Do you want to keep the house? Fund your children's college education? Or invest in your own education to enhance your earning potential?
And what about retirement?
Don't forget to work to ensure that your part of the shared assets will be enough to help secure a stable financial future.
You need to understand the scope and duration of potential financial responsibilities, such as alimony and child support.
Consider the financial implications of any support payments and how they might influence your future.
We recommend that you talk to your advisor and your attorney to fully understand and plan for these responsibilities.
Obtain all relevant financial documents, including income statements, tax returns, investment portfolios, real estate deeds, and any other key records.
Take the time to carefully review these documents to gain insight into your current financial standing. Learn which areas may need attention or further clarification during the divorce process. And be meticulous in gathering this information, as it will protect your moving forward.
Establishing a true, accurate budget (your advisor can help with this) post-divorce is paramount to understanding your financial obligations and ensuring financial stability.
This includes accounting for all expenses, including housing, utilities, groceries, insurance, and any potential legal or financial fees associated with the divorce. You’ll need to allocate a portion of your budget towards savings and emergency funds to prepare for any unforeseen circumstances.
Developing a comprehensive financial plan for your post-divorce life is critical. A well-crafted financial plan considers your current financial situation, including income, expenses, assets, and liabilities, and outlines strategic steps to optimize your resources and help you achieve long-term financial security.
By adopting these financial considerations and estate-planning tools into your divorce proceedings, you can proactively manage your financial well-being and establish a more safe and organized foundation going forward.
Taking a proactive approach to financial planning and estate planning empowers you to make informed decisions and safeguard your financial interests, ensuring a secure and stable future for yourself and your loved ones.