Your Finances: The Dividing Line

Financial Health During Divorce

There are steps you can take to maintain financial health during divorce, including safeguarding important documents, watching your credit score and reviewing investments.

Going through a divorce can be an emotionally painful and difficult time. While this experience is never easy, it is important to think about the financial consequences of separating from a spouse. There isn't much you can do to be prepared emotionally for a divorce, but there are a few things you should look at that can help to keep your finances in order during this tough time.

Compile paperwork. While paperwork may be the last thing on your mind, it's important to gather all of your important documents and financial statements so you can see where you stand. Taking a comprehensive audit of your financial assets and liabilities - and your spouse's - is an important step. Having all of these items together will save you time and headaches later.

Look into your retirement assets. You and your spouse may have been contributing to retirement plans, such as IRAs or 401(k)s, during your marriage and you may be entitled to a portion of your spouse's retirement assets. Your divorce decree will specify the details but you'll want to be aware of what kinds of plans you both have and where these funds are held.

Check your credit status. When going through a divorce, your finances will eventually be separated from your spouse's. As a result, you'll want to get copies of your credit report and check it for any errors. If you do find any errors, you should promptly notify the credit reporting agencies. If your ex-spouse has credit problems, you'll also want to write a letter of explanation to the reporting agency so it can be placed in your file. In addition, if you don't already own a credit card of your own, you should get one so you can start establishing your own credit history.

Update your beneficiary designations and estate plan. With any major change in your life you should review your beneficiary designations as well as your estate plan, to ensure that they are still accurate. Because your spouse may have been your primary beneficiary, you should reevaluate these decisions and consider other alternatives.

Determine your income needs. Your household income will likely have changed, so you should take a close look at your expenses - your mortgage, utility bills, food and medical expenses. In addition, if you have children, there may be some educational expenses you should be prepared for as well. By knowing how much income you'll need on a monthly or yearly basis, you'll be better prepared to allocate your money and plan for upcoming financial expenses.

Review your investment portfolio. Your financial goals, risk tolerance and time horizon may have changed along with your marital status and your portfolio should reflect your new circumstances. You should work with your financial consultant to implement any immediate adjustments necessary, as well look into your overall plan for the future. You may also need to reevaluate prior decisions to make sure your investments will still meet your updated goals.
As you can see, there are several steps you can take to make sure you have your finances buttoned up during a difficult personal time. There are many resources available - including your financial consultant - that can help you make the best decisions for your financial well-being.

Richard (Fritze) Reimers, CFP®
CERTIFIED FINANCIAL PLANNER TM
30448 Ranch Viejo Road, Suite 110
San Juan Capistrano, CA 92675
Toll free: 866-886-7593
Direct: 949-234-2343
Fax: 949-234-0326
Email: reimersr@stifel.com

For a consultation with The Law Offices of Burch, Coulston & Shepard, LLP, call (949) 565-4158 or contact us online.

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