Life turns to a new page after divorce. Unfortunately, the chapter that follows isn’t always the easiest to start. Emotions run high, and the path forward looks foggy. But that doesn’t mean you’re powerless in finding clarity. 

It’s time to walk through an after-divorce checklist. Below, you’ll learn about the important financial boxes to check off in this season of your life. You’ll also learn how to navigate this checklist proficiently by working alongside the right professionals. 

How Are Finances Split in a Divorce?

It’s important to understand how your finances can be split after a divorce. Got a prenup or postnup? That’ll play a big role. But where you live matters too. If you call a community property state (i.e. Idaho, New Mexico, California, Louisiana, Wisconsin, Texas, Washington, Arizona) home, there are important implications. 

In these states, what you (or your spouse) earned or bought during the marriage is typically split right down the middle. However, in other states, the rules can be completely different. 

Make sure you’re in touch with an expert divorce attorney during this time. Other rules may differ depending on your unique circumstances. It’s important to understand these differences and how they will impact your financial future – especially as you work through the rest of this after-divorce checklist. 

Sorting Finances: After-Divorce Checklist (Immediate)

In the initial wake of your divorce, you may feel overwhelmed. So don’t try to bite off more than you can chew. Keep things simple. Prioritize getting your bearings and securing safety. 

#1 Get Your Bearings

Take the time to get your bearings. With a few straightforward steps, you’ll feel like you’re regaining control. Start clearing the haze and steadying the course by completing the following:

List Out Your Assets: Write down everything that’s now yours. Whether it’s the car, the house, or certain investment accounts, get clear on what’s under your control. This action is very empowering in helping you move forward. 

Close Joint Accounts: It’s time to untangle. Start closing any joint accounts to make sure your finances are truly separated. This helps keep things clean and simple. 

Know Your Numbers:  Get clear on what you have, where it is, and what name it is currently registered in.  What are the investment accounts and WHERE are they? Know the key figures of your present situation such as your bank balance, outstanding debt, and credit score. Given this is after the divorce, the financial decree should outline the assets that were put on your side. Consult your attorney if you’re still unsure. For further help, bring in a financial professional that specializes in post-divorce financial transitions.

# 2 Secure Safety

After getting your bearings, start creating a safety net. Stability is key at this point. It’s all about creating more peace of mind and knowing you’re protected as you rebuild your life. Here’s how you can take back control:

Update Passwords: With a new beginning comes new passwords. Update the security on all your financial accounts. Keep that new information in a secure place. 

Monitor Account Activity: Keep a watchful eye on your bank and credit accounts. Staying vigilant ensures fewer surprises, identifies potential vulnerabilities, and helps you stay in control over your money. 

Start Building an Emergency Fund: Divorce is a reminder that unexpected things happen. That’s why an emergency fund is crucial. You’ll want a healthy 3 – 6 months of living expenses stashed away. If you don’t already have this, start small. Just saving a few thousand dollars in an immediately accessible place will help you breathe easier. 

Rebuilding Finances: After-Divorce Checklist (Short-Term)

Now you’re ready to roll full speed ahead. It’s time to start rebuilding your finances. At this stage, you’ll want a financial thinking partner, a streamlined budget, and an understanding of what’s left from a legal perspective – including future tax and Social Security implications. 

#3 Get a Financial Thinking Partner

A financial thinking partner will make running through this after-divorce checklist a lot easier. Remember, you’re not alone in handling these challenges.

A financial advisor takes a closer look at your specific financial situation. They provide tailored guidance as you create a budget, manage debts, invest, and plan out your new future. You’ll also have a go-to resource for all your questions and concerns over what’s going on in the market.

Important Note: It’s easy to postpone this checklist item – emotions run high and procrastination kicks in. But delaying this step can lead to irreversible damage. Don’t let an emotional whirlwind wreck a steadier course. Act now for peace of mind later.

#4 Get On a New Budget

Divorce reshapes your financial landscape. But a new, post-divorce budget helps you move through it smoothly. Your new lifestyle desires and expenses need to be accounted for, and an updated budget keeps you tuned into what’s going in (and out) of your wallet.

A detailed budget will shed light on your spending patterns and your progress towards (or away) from your financial goals. But most importantly, it’ll start to stabilize your internal world.

Rewriting a budget can be tricky. But you can lean on your financial thinking partner for help. They’ll help you break down your post-divorce income and expenses, streamline your savings, and develop an achievable vision of the future.

With a new budget and expert advice tailored to your new chapter, you can build a foundation that will support your financial rebuilding. You don’t have to settle for just making ends meet. You can create a life you can love and afford.

#5 Attend to Legal Matters

You’ll need to attend to various legal matters following your divorce. By tying up loose financial ends now, fewer things can trip you up later. These steps can seem daunting at first. But taking them one at a time makes them more manageable. Make sure to handle the following legal matters:

Legally Change Your Name: If you’re looking to reclaim a former last name or choose a new one, now’s the time. Make it official, and embrace the new you. 

Social Security Changes: This is key. If you’ve changed your name, you’ll need to update your Social Security info through the Social Security Administration. Your tax records and government benefits are linked to it. 

Go Through Any Deed Changes: If you shared property, this one’s important. Make sure any changes in ownership are reflected in the deeds.

Update Beneficiaries: Don’t forget about these. Go through your retirement accounts and insurance policies. Make sure the right people are listed as beneficiaries.

Change/Nullify Trust Documents or Wills: Your post-divorce life may necessitate a review of your will or trust documents. Make sure your assets and estate are distributed according to your new wishes. Meet with an attorney to ensure all the legal paperwork is in line with your current intentions.

Open New Accounts: Now that you’re starting fresh, it might be time for new bank accounts or credit cards. Choose wisely and build strong financial foundations. A financial advisor can help you select the account(s) right for you. 

Acquire New Insurance: Divorce can change your insurance needs. Whether it’s car, home, or health insurance, make sure you’re adequately covered. Talk to your advisor about your coverage needs and premium costs. 

QDROs: Qualified Domestic Relations Orders (QDROs) come into play when you’re receiving benefits from your spouse’s workplace retirement plan. These documents are mandated by law and they dictate how a retirement plan will cover the costs of things like marital property rights, alimony,  or child support. Work with an experienced lawyer who specializes in these to make sure you’re receiving your fair share. Sometimes the attorney who was great at negotiating your settlement is less efficient at getting these orders through the process.

#6 Review Tax and Social Security Implications

Divorce can have a ripple effect on your Social Security benefits and taxes. If these financial puzzle pieces have shifted, it’s time to review the changes so you can see the new big picture more clearly. 

The Social Security Administration provides post-divorce guidelines for how your Social Security benefits may be impacted after a separation. At a high level, any additional benefits will depend on factors such as your (or your spouse’s) age, marital status, marriage history, and present benefit entitlement.

From a tax perspective, it’s time to reassess your filing status. You also need to know how alimony or child support comes into play. Consider hiring a CPA to help you over these hurdles. They may be able to provide further insights into the tax considerations surrounding your post-divorce situation.

Important Note: Financial advisors and CPAs make a powerful team. CPAs bring robust year-over-year knowledge to the table, which can help you save big each tax season. But financial advisors take a lifetime perspective. They structure investments so you save over decades. With both professionals at your side, you get the best of both tax worlds. 

Managing Finances: After-Divorce Checklist (Long-Term)

Managing your finances after a divorce is an ongoing process. It requires developing a long-term vision of the future and streamlining your investments to get there. But it also involves protecting yourself, and those you care about. That’s where estate planning comes in.

#7 Develop a Long-Term Financial Plan

This is your new chapter. You decide where things are headed. Make a long-term financial plan to solidify the path that’ll take you there. 

Start by working backwards from your ideal future. Envision where you want to be in 5, 10, or 20 years. Then, sit down with your financial thinking partner to chart the course. Together you’ll identify the strategy for your future financial security and fulfillment. 

Don’t worry if you’re still emotionally shaken. Don’t think you have to know all the answers. The right advisor will help through the entire process. If you’d like to see an example of this in action, check out the following divorced client case study.

Want More Help in Creating Your Long-Term Plan?

If you’re looking for financial guidance during a difficult time, but you’re not ready to schedule a call with us, we recommend our free guide, “Finding Your Financial Footing.”

It reveals 5 clear steps to calm the chaos after divorce.

#8 Streamline Investments

With the long-term path clarified, it’s time to streamline your investments. Your investments are the fuel behind your financial future. You’ll want to make sure they’re premium quality before you set off on your new retirement journey. 

Diving into your portfolio after divorce is essential. Your risk tolerance may have changed. Your goals may have changed too. Sit down with your advisor, and make sure the investments powering your portfolio align with your new life and long-term plans. 

#9 Estate Planning

Your estate plan likely involved your ex-spouse. It’s now time to evaluate the legacy you intend to leave behind. This isn’t just about paperwork. It’s about ensuring your wishes and assets are respected. 

Below, are some key estate planning documents to focus on:

Will: Take a close look at your will. Your ex-spouse is probably included. You may want to make updates to how your assets will be passed on. 

Trusts: If you’ve set up any amenable trusts, review the terms. They should reflect your new legacy wishes. 

Financial Power of Attorney: Double-check the proper person is appointed to look after your finances in the event you need them to. 

Medical Power of Attorney: Ensure the right person is making medical decisions on your behalf should you become unwell. 

Snowpine Wealth Can Help You With Finances After Divorce 

If you would like us to guide you through this difficult moment instead of going through it alone…

We offer a free consultation called the Financial Transition StrategyTM

It’s designed to help you quiet the noise and create a clear path forward, as well as help you get to know us and see if we’d be a good fit to work together. 

We’re always respectful, and there’s never any pressure. 

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services not offered through Commonwealth Financial Network®.

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