The emotional rollercoaster one endures during and after a divorce can be debilitating. Equally devastating are the financial fallouts that can ensue from these life transitions. However, there is a ray of sunshine beyond the storm when women assess the facts of their newly single life and take the time to re-establish themselves while rebuilding a strong financial foundation for their future.
Re-title financial accounts. Closing joint bank and credit card accounts ensures that ongoing liabilities of one party do not become the responsibility of the other party down the road. Equally important is checking credit scores to identify and resolve any issues that could tarnish one’s credit worthiness and affect one’s ability to stand on her own financially going forward. Once all prior debts are satisfied, women should open new accounts in their names and start establishing their own credit history, especially if prior credit was dependent on the former spouse.
Update beneficiaries. When re-titling accounts, women should update transfer on death (TOD) registrations and change the named beneficiaries on bank, investment and retirement accounts as well as insurance policies to ensure ex-spouses will have no claim to their assets upon their deaths. Making these revisions is a simple process that typically requires individuals to complete a form that they may obtain from their banks or financial advisors.
Review and update estate plans. If a will or trust is already in place, women should review these documents with legal and financial counsel to ensure that they continue to reflect their wishes. This can include naming persons to serve as guardians for minor children and executors and trustees of their estates, as well as beneficiary designations for trusts, employee group benefits and retirement plans. In addition, women should ensure they have health care and durable financial powers of attorney to name someone to act on their behalf and make medical decisions, should they become sick, hurt or incapacitated. Similarly, by having a living will in place, women can document their preferences with regard to life-sustaining medical care.
Update Insurance Policies. Women should make certain that they have health insurance in place for themselves and their children, either through former spouses, COBRA, their employers or new individual policies. Evaluating property/casualty, personal life and umbrella insurance policies can further ensure that women have the right type and amount of coverage to meet their new needs. Women should also consider disability insurance to provide peace of mind and protect their ability to earn a living, should they become disabled, as well as long-term care coverage, if they are over 50, to help pay for needed assistance.
Evaluate Career and Lifestyle. Following a divorce, each spouse may have less resources available to them than what they are accustomed to. Women should take this as an opportunity to assess their career options and evaluate their lifestyle “needs” versus “wants.” A new home may be better suited for one’s new lifestyle or a new career path may provide a renewed sense of purpose, fulfillment and earnings to preserve assets for long-term retirement needs.
Plan and Budget. Women can more easily manage and achieve their financial goals when they map out a blueprint of their post-divorce finances and budget accordingly. While these plans may address the short-term realities of doing more with less, the focus is on long-term financial goals, such as establishing an emergency reserve and saving for retirement or children’s education. Oftentimes, a review of investments can help to identify opportunities to manage risks and maximize returns.
With any budgeting, special consideration should be given to understanding one’s tax liabilities following divorce to help ensure that newly established budgets address these obligations. One’s financial advisor and accountant are great resources to help guide women through the budgeting process.
Life transitions are never easy. However, taking the time to understand one’s financial options and address post-divorce issues and opportunities head on, often with the help of financial advisors, will empower women to move ahead and take control of the financial aspects of their new lives.
About the Author: Kathleen Marteney, CRPC, is a registered representative with Raymond James Financial Services and a financial planner with Provenance Wealth Advisors, an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants. She can be reached at (305)379-8888 or via email at info@provwealth.com.
Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.
This material is being provided for information purposes only and is not a complete description,
nor is it a recommendation. Any opinions are those of Kathleen Marteney and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional.
The post How Women Can Establish Financial Independence Following Divorce by By Kathleen Marteney, CRPC appeared first on Provenance Wealth Advisors.