By Laurel Kutler, CFP®
If your divorce is finally over, you might be breathing a sigh of relief. But if you’re like many recent divorcées or divorcés, you still have some work to do. You might be worried that financial planning after divorce could compound your stress, but it’s an indispensable part of moving on.
Not sure how to map out your life going forward? Here are a few tips to help you with financial planning after divorce.
After the Divorce: Immediate Priorities
Once your divorce is finalized, you don’t have to create a new, detailed financial plan right away. However, there are a few immediate steps we recommend you take to safeguard your credit and your overall financial well-being.
Verify Your Finances Are Completely Separate
If you stay financially connected to your former spouse, you run the risk of being held liable for debt that isn’t really yours or suffering credit damage. Follow this checklist in order to separate your finances:
- If you were awarded assets in the divorce, retitle them in your name only.
- Close all joint bank accounts and joint credit cards.
- Refinance or remove your name from joint debt accounts.
It’s easy to forget a step when you’re separating your finances. That’s why working with a financial advisor is a good idea. Your advisor can review your situation and assist you with financial planning after divorce.
Update Your Beneficiaries
During your marriage, you may have listed your spouse as a beneficiary on your bank accounts, investment accounts, and insurance policies. A crucial part of financial planning after divorce is updating your beneficiaries.
Typically, a beneficiary listed on an account takes precedence over a beneficiary listed in a will. This means if you fail to properly change all your beneficiary designations, some of your assets could go to your ex-spouse after your death.
Review Your Income and Expenses
You don’t have to create a long-term financial plan right away, but you should look over your income and expenses to verify you have sufficient cash flow for your lifestyle. If necessary, work with your financial advisor to build a new budget.
For most of my clients, a divorce means a decrease in household income, so creating a new budget is an important part of financial planning after divorce.
Next: Reestablishing Financial Stability
Once you’ve separated your finances and assessed your immediate financial needs, you may need to realign your finances with your long-term goals. This phase of financial planning after divorce could involve the following:
- Reassessing your investments and rebalancing your portfolio (if needed)
- Updating your life insurance and other insurance coverage
- Building an emergency fund (if necessary)
You should also obtain a copy of your credit report to see whether your finances are fully separate. If you need to establish or build credit in your own name, you can start taking steps to do so.
Want to Learn More About Financial Planning After Divorce?
Financial planning after divorce isn’t easy, but it offers you an opportunity to design your future on your own terms. And fortunately, this is not a journey you have to take alone. At ABLE Financial Group, we’ve helped countless people align their new financial situations with their long-term goals.
If you’re ready to take charge of financial planning after divorce, contact us online. To learn more about our team and the ways we can help guide you, call 480.258.6104 or email adam@ablefinancialgroup.com today.
Frequently Asked Questions
What is the first step in financial planning after divorce?
The first step in financial planning after divorce is separating your finances completely. This includes closing joint accounts, retitling assets, and removing your name from shared debts. Taking these actions early can help protect your credit and prevent future complications. If you’re looking for assistance to review your accounts and confirm everything is properly separated, ABLE Financial Group can help.
How does divorce impact financial planning long term?
Divorce often changes your income, expenses, and long-term goals, making it necessary to reassess your entire financial plan. This may include updating your budget, rebalancing investments, and adjusting retirement or insurance strategies to reflect your new situation. ABLE Financial Group can help you build a plan that supports your financial independence moving forward.
What should I update after a divorce from a financial perspective?
After a divorce, it’s important to update beneficiary designations, review your insurance coverage, and check your credit report. You may also need to establish new accounts in your name and rebuild your financial foundation. These updates help your finances reflect your new life circumstances. Get in touch with the ABLE Financial Group team if you’d like professional guidance through these changes to keep you on track.
About Laurel
Laurel Kutler is a Financial Advisor at ABLE Financial Group, a financial services practice that focuses on transition planning and simplifying the complexities of their clients’ wealth. Originally from a small town in North Carolina, Laurel is a graduate of the University of North Carolina at Charlotte. She earned a degree in communications with a focus in public relations.
Beginning her career as a financial advisor with Edward Jones, Laurel is driven by a combination of passion for finance and a commitment to make a positive impact on individuals’ lives. She saw financial advisory as a unique opportunity to empower others with the knowledge and strategies needed to secure their financial futures.
Laurel specializes in working closely with 401(k) plans and their participants, as well as assisting divorcees and widows. She brings energy and enthusiasm to solving client needs and often with the empathy needed to help them navigate difficult situations.
Currently residing in Scottsdale, Laurel has diverse interests outside of her professional life. She enjoys hiking, hosting dinner parties for friends, and takes pleasure in traveling whenever possible.
