Once a person finalizes their divorce, they are more than likely ready to move forward with a new chapter in their life. This, of course, means everything from adapting to new child custody arrangements and child support obligations to solidifying new living arrangements and adjusting their finances.
According to experts, it’s very important for this adjustment of post-divorce finances to take place sooner than later and to ensure that it covers more than just crafting a post-divorce budget.
In today’s post, we’ll take a brief look at some post-divorce financial issues that experts say merit close and immediate attention.
According to experts, it’s not uncommon for a person’s entire retirement portfolio to be completely upended in the wake of a divorce. That’s because 401(k) and IRAs may have been divided, reducing retirement balances and/or altering the underlying investment strategy.
Given this reality, experts encourage the newly divorced to reexamine their portfolio to ensure their retirement goals will be met and, if necessary, to undertake the necessary diversification. Similarly, they advise them to figure out their new budget as soon as possible so that saving for retirement can once again begin in earnest.
Update your estate plan and your beneficiary designations
Your estate plan and other important assets like life insurance policies may not be the first thing on your mind immediately after your divorce. However, experts once again remind people that these important issues must be addressed as soon as possible after the divorce, especially if you have children.
“One of the most important things to rebuild [after divorce] is your estate plan,” said one attorney. “The marriage may end, but your children will always need to be protected. The kids still need to be protected from probate and other pitfalls that can come from a lack of an estate plan.”
To that end, experts recommend that anything from wills and trusts to powers of attorney and health care proxies must be revised after a divorce to ensure your exact wishes are followed.
As far as beneficiary designations are concerned, there is a very good chance that a divorced person does not want their life insurance payout or retirement accounts to go to their former spouse in the event of their untimely demise. As such, experts recommend revisiting beneficiary designations as soon as possible, as well as taking the time to re-title any assets (home, vehicles, etc.) that were once jointly owned.
To learn more about your rights and options concerning divorce, divorce-related issues or divorce modifications, consider speaking with an experienced legal professional.
Source: Daily Finance, “5 tasks to help you start to rebound financially post-divorce,” Hank Coleman, April 29, 2014