Divorce is more than emotionally devastating. The financial damage that results from a marriage ending can impact life following the marital dissolution. According to Mark Avallone, author of Countdown to Financial Freedom, divorce planning and financial planning can go hand in hand.
Proactive steps include:
- Find out what you own and do not own with a financial inventory of your assets and income. Knowing your situation puts you in a better negotiating position in settlement talks.
- Understand that tax ramifications exist when assets are divided in divorce. Knowing specifically what you own and owe can help determine the capital gains or future taxation of any property you may receive.
- Protect one of your most value assets: your credit. Far too many ex-spouses are left responsible with debts they were not aware of. Identify any debts or liens before the divorce is finalized.
- Make sure your spouse is no longer listed as a beneficiary of retirement plans, insurance policies and other accounts. You also need to review estate planning documents to reflect the change in marital status.
- Minimize the financial stress that comes from a reduced cash flow. Your post-divorce life may require an adjustment to your lifestyle based on the current income.
- Educate yourself on proper financial management to ensure future stability. Make regular payment on credit cards and utility bills while putting money into a retirement account.
The end of a marriage is painful. However, sound strategies can help prevent the pain that comes with financial problems both now and in the future.