Take Action to Protect Yourself Financially After Divorce

April 05, 2012

Take Action to Protect Yourself Financially After Divorce

Divorce is often one of the most stressful experiences of a person's life. Psychiatrists equate the emotional upheaval that divorce and all the accompanying changes inflict with the death of a loved one or loss of a job. When people are going through divorce, the last thing they may feel capable of doing is financial planning for their futures as single people. However, those going through divorceneed to take steps to ensure their long-term financial security.

Cut Ties With Former Spouse

One of the most important things people should do after a divorce is to cut financial ties with their former spouse. Close any joint bank accounts and distribute the assets in the accounts consistent with the terms of the divorce decree. People should also cancel any credit cards in both spouses' names, since they remain liable for any charges incurred on such cards as long as their names remain on the accounts, even after the divorce.

Additionally, a person should remove his or her former spouse's signing power on any safe deposit boxes, personal bank accounts and credit cards.

Changing the title of assets such as real estate and vehicles in one name only is also important.

Meet With Professionals

Seeking the help of financial professionals is often useful. After a divorce, a financial planner, investment adviser or banker can help create new budget and investment plans that work with the person's change in marital status.

During the meeting, a person should give extra attention to retirement planning and review any retirement assets retained in the property settlement. People should know the values of and the rules that govern such accounts.

People may also need to discuss health and life insurance options, depending on whether coverage changed as a result of divorce.

Designate Beneficiaries

It is vital to update estate plans after life changes such as divorce. Many people have former spouses as beneficiaries in wills and non-probate assets such as retirement accounts, trusts and insurance policies. Divorce does not automatically nullify such provisions. People need to name new beneficiaries so their assets will go to those whom they want to have inherit.

Consult an Attorney

Those considering divorce should meet with an experienced divorce attorney who can protect their interests during the divorce settlement and make sure they receive a just property award that allows them to meet their future financial needs.

Article provided by Thompson Law Firm
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