10 Sound Financial Planning Steps to Take After Divorce
Updated September 14th, 2017
While going through a divorce can be extremely stressful, it is important to understand that the changes don’t end when the ink dries on the legal paperwork. Life as a single person brings on new responsibilities – including those surrounding personal finances. If you or someone you know is going through or considering a divorce, in New York, contact experienced family court lawyers in Brooklyn to learn about your rights and obligations under the law.
You can never have too much good advice when it comes to ensuring you have adequate money for the present and the future. Below are 10 more tips to consider after your divorce. You may also wish to seek help from an estate planning attorney.
Below are five steps that can help organize this new chapter in your life, so that you can move forward.
1. Cancel Joint & Open New Accounts
If you haven’t done so already, all joint accounts should be canceled and closed because if they stay active you could still be held liable. Likewise, you need to open a new bank, credit, and investment accounts in your own name to replace the recently closed joint ones.
2. Update Your Estate Plan
Update or create a living will, power of attorney for health care and finance issues and other documents including beneficiaries (which usually require completion of a simple form) for retirement accounts, life and/or disability insurance, and other assets.
3. Retitle Your Assets
Post-divorce, many personal and real assets need to be “retitled” or the name of ownership needs to be changed to your sole name or to a living trust.
4. Change Your Name on All Accounts
If you change your name after a divorce, make sure all of your accounts (credit cards, bank accounts, retirement accounts) and identifying documents (such as driver’s license, Social Security card, passport) reflect the same information to avoid issues.
5. Project & Plan Your Finances
Run new tax projections with your accountant, analyze your investments, create a budget, and hire the appropriate advisors in order to keep your financial house in order after a divorce.
6. Review Insurance Policies
Contact your brokers for any insurance policies you have—such as for the house or car—and see what your policies entail. You may be paying insurance for assets you no longer own, such as cars, artwork, and jewelry. If your spouse received these items or they were sold, there’s no use paying more to insure them.
7. Have Cash Set Aside
Emergencies happen. How will you pay for car repairs or a new appliance? Try to have six months worth of expenses in a bank account. You may also wish to set aside some money in a short-term bond or CD so it can accumulate interest.
8. Check Your Credit
It’s a good idea to keep tabs on your credit score after a divorce. You can get a free report online but will have to pay for a credit score, which is highly recommended. Look for any errors, and remember—even if the other spouse got the car, if the loan was in your name, you could still be responsible for making the payments. If the other spouse is not making the payments, your credit score could be negatively affected. Get the loan out of your name.
9. Consider Taxes
It makes sense to work with an accountant following a divorce so you can get an idea of your taxes for the next tax year. Your accountant can run the numbers and see if you can expect to pay more and fewer taxes based on your new income. Going from two incomes to one will likely change your tax bracket.
10. Think About the Children
While the other parent will be paying some child support, you need to think beyond that. What about extra expenses such as sports activities, medical expenses, and when the children are older, cars and college tuition? You might want to set aside money in an account to pay for these expenses and create a plan with the other parent to help pay for the costs of these major expenses.
Family Court Lawyers in Brooklyn
Couples considering or facing divorce should contact experienced family court lawyers in Brooklyn to learn about rights and obligations that come with a legal separation. The attorneys at the offices of Alatsas Law Firm have years of experience in family law and guide their clients every step of the way. Call (718)-233-2903 today to schedule your initial free case evaluation.