Divorce is emotional. Which is why it’s good to have a team in place looking out for your best interests. That includes your finances. Generally, we recommend divorcing spouses each work with their own financial advisor, that way you know your advisor is looking out for your best interests throughout the process. The following steps can help you stay organized throughout the process.
Log your accounts and assets
Divorce can be contentious under the best of circumstances, and the biggest areas of conflict generally surround children and money. Getting organized early on can help you, to some degree, with both.
☐ Take inventory of any financial assets. List any joint bank, retirement, or investment accounts, plus any in your or your spouse’s name.
Note any information you need to access these accounts: passwords, pins, security questions, login info, and so on.
☐ Monitor accounts. This can help you get a sense of expenses you may not be aware of. But you also want to look for any surprises or changes; if you see something suspicious, consider contacting your lawyer.
☐ Check your credit. Keeping an eye on your credit score and report can help you stay on top of how divorce proceedings may be affecting your finances.
☐ Review your assets.
☐ Investment accounts. Splitting the assets in an investment account can be complicated (not all investments are the same). A financial advisor can help with this.
☐ Physical assets. This includes any cars and your home(s), as well as any other major assets like jewelry, boats, or art. Note who owns the property, the approximate value of the asset, and the amount you still owe (if anything).
Note any assets you feel strongly about keeping; this can help your lawyer advocate for you during divorce proceedings.
☐ Review any joint bills, loans, or credit cards. This is particularly important since you and your (ex) spouse can impact each other’s credit.
☐ Don’t forget small things, like your utility statement.
☐ Create a plan to separate your accounts. Talk to your lawyer about how (and when) to separate any joint accounts.
While you may be tempted to close accounts, sell assets, or otherwise make moves to protect your interests, it’s a good idea to talk to a lawyer before making any big changes to ensure it won’t hurt your position in the long run.
Prepare for logistical changes
Create a tax plan. Taxes may not be top of mind when you start divorce proceedings, but if you don’t plan ahead, you could be faced with unwelcome surprises when it comes time to file.
☐ Note your filing status. Depending on circumstances, such as whether you have children, your filing status could change to either “single filer” or “head of household” for the year your divorce is finalized. Because this can come with tax benefits or liabilities, this has the potential to be contentious.
☐ Adjust your withholdings. Major changes to tax brackets and income status (and source) can be confusing. Reaching out to a tax professional early in the process can help.
Review insurance coverage. You may need to update your insurance plans or acquire new coverage.
☐ Health insurance. If you had coverage through your spouse’s healthcare plan, investigate your coverage options. Divorce counts as a major life event, so you may be able to explore public exchanges. Just keep in mind: Individual coverage that’s not subsidized by an employer may cost significantly more. We can talk through some of the options you may have available to you, including high-deductible plans, HSAs, and other considerations.
☐ Life insurance. These policies are generally designed to provide for your family, and as your family dynamics change, the policy may need to as well. In some cases, you may need to adjust the value of your policy to account for potential alimony or child support payments. Your attorney can help you understand the various considerations.
☐ Home and auto insurance. As you move out, downsize, or buy a new car, you’re going to have to adjust your insurance coverage accordingly.
Build a budget for after. To put it simply, a lot is going to change in your day-to-day life post-divorce. But considering those changes now and building a rough budget can help you adjust. The following (somewhat big-picture questions) can help you get a sense for these numbers from a practical perspective.
☐ Where will you live? And what is the average cost of housing in the area?
☐ What car will you drive? What type of car payment (and insurance) can you afford?
☐ What will you spend on your kids? How will you and your ex split the cost of expenses?
☐ What expenses do you expect to stay the same, and which might change? (Consider gym memberships, meals out, travel, and the like.)
If you don’t have the answer to these questions yet, that’s okay. As you consider the changes ahead, work with your financial advisor to keep a handle on how the big changes and small fit together in your updated financial plan.
After the divorce
Divorce comes with a significant amount of paperwork, whether it’s updating your marital status on official forms or reading through attorney’s fees. This can help you stay on top of things:
☐ Make updates to your insurance and accounts. Implement the updates you planned for during the divorce.
☐ Change your name (if applicable). The process will resemble what you went through the first time around. Be sure to:
☐ Request a new Social Security card, driver’s license, and passport.
☐ Update any bank accounts, investment accounts, insurance policies, and so on.
☐ Update your estate plan. It’s easy to put off these revisions, but delays could mean your ex gets your money instead of the people you want to have it.
☐ Update your will and any trust documents. Be sure to get them notarized.
☐ Update the beneficiaries on any retirement or investment accounts.
☐ Update the beneficiaries on any life insurance policies (ensure they abide by any court-ordered coverage).
Divorce can be a messy process, but having a handle on what you need to do and when can help the process feel less stressful. A financial advisor who’s been through this before can work with your attorney and help support you through this process.
Don’t hesitate to reach out for guidance during this critical life change.