While some couples may sign a prenuptial agreement, divorce is something no one can, nor wants to anticipate. So if it does happen, the financial hit can be almost as difficult as the emotional one. While you will find helpful suggestions from a range of sources, your first step in all cases should be to consult with an attorney in your state before taking any action or making any decisions.
Make a list of your financial assets
Inform yourself by making a detailed list of your assets to fully understand your financial situation. Collect documentation of your assets, including bank and retirement statements, tax returns, auto loans and property deeds.1
Start tracking your regular expenses
Decisions around spousal support, child support and how to divide financial assets may be impacted by your household expenses and incomes. Begin tracking these numbers as soon as possible. Household expenses can include recurring bills, maintenance, transportation, child care, groceries and other regular payments.
Choose the best type of lawyer for you
During a divorce, you and your attorney will have a range of options on how to proceed. You and your attorney can consider legal costs and expert fees as part of the entire process.
Plan ahead for your children
If you and your spouse have children together, consider how you will incorporate expenses such as college tuition and future weddings into your plan and budget. Making these decisions during the divorce can help prevent issues and disagreements in the future.
Think about retirement
Were you married at least 10 years, and did your spouse earn more than you? Check with the Social Security Administration to see if you may be eligible to receive a portion of your spouse’s Social Security benefits or retirement contributions.2 This can help provide financial stability for the future, so be sure to check with your lawyer to see if you qualify.
Find trustworthy resources
With all of the advice available online, it can be difficult to know where to turn for the best guidance. The Insurance Information Institute has an informative, helpful guide that outlines different factors as relating to insurance to consider as you’re going through a divorce.3 If you have other questions about how divorce specifically impacts your policies, contact your insurance providers.
Review your life insurance
One of the most critical policies you should reassess after divorce is life insurance. If you have your spouse listed as a beneficiary and vice versa, you need to update these designations, even if you want to keep your former spouse as the beneficiary. However, while sharing children could be a good reason to keep each other listed (whether it’s because one of you continues to provide income for the family or the other is responsible for child care), many state laws provide that to keep a former spouse as a beneficiary after a divorce, the former spouse needs to be reaffirmed as a beneficiary after the divorce.3 If neither of you had previously carried life insurance, divorce is a significant time to revisit your needs. In fact, some settlements that include provisions for alimony or child support require the supporting spouse to have a life insurance policy.4
1 How Women Can Prepare Financially for Divorce, The Balance, 2018.
2 If You Are Divorced, Social Security Administration, 2019.
3 Divorced, Insurance Information Institute, 2019.
4 The Legality of Forced Life Insurance Policies in Divorce, LegalZoom, 2019.
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ALIC45719 (exp. 5/20)