If you are going through a divorce or beginning to start the proceedings you may have overlooked all the financial details of a marriage and divorce. But the financial details will not go away and a divorce can only muddy the waters. A large portion of divorce proceedings focuses on dividing assets and finances. Protect yourself so you get your fair share. Below are ten financial steps everyone should take when going through a divorce.
#1 – Get a copy of your credit report
You should request a copy of your credit report from all three credit reporting agencies: Experian, Equifax, and TransUnion. This will succinctly show you all outstanding debts, balances, and payments being held in your name. Remember that it is possible your spouse has opened an account with your name on it without your knowledge. These credit reports will give you a clear financial picture of where you stand.
#2 – Open your own accounts
It is important to open up accounts in your name only before the divorce proceedings start. This makes it easier to do so. You should open up your own checking account, savings account and brokerage accounts. Apply for a credit card held in your name only.
#3 – Close the joint accounts
Divorces can take several months or more. During this time you can protect yourself from future financial liabilities by closing all joint accounts such as bank accounts and credit cards. Do so in writing and keep a copy for your records. Ask the bank to report the account as “closed by the customer” so it will not negatively report on your credit report.
#4 – Keep your assets in your name
You will have assets that you owned before you got married that are in your name. This can include your vehicle, real estate, inheritance, gifts, etc. Make sure you keep these assets separately. If you transfer them into joint accounts you may lose them.
#5 – Should you sell the house?
In past years, most women tried to keep the family home above all else. They would get blind to what they might be giving up to keep the house. It is more prudent to consider selling the family home. You can then divide the proceeds according to the divorce terms, often without paying any capital gains on the sale of the home.
#6 – Update your beneficiary
It is imperative that you individually change the beneficiary on any insurance policy, your will, trusts, pension plans, etc. The divorce will not do this for you. You will need to contact each company, delete your spouse’s name, and change the beneficiary in writing. You may even want to change coverage amounts while you are updating policies.
#7 – Get your name back
You are divorcing him, why keep his name? You can reclaim your maiden name by showing your divorce document to the proper agencies. This would include your driver’s license, passport, and social security number. You can then begin changing your name at doctor’s offices, insurance policies, schools, etc. You will also need to fill out a new W-4 or other proper tax form so your new name is recorded properly with the IRS.
#8 – Social Security
If you are of social security age, 62 currently, or close, you should contact the Social Security Administration. If you are 62 and have been married for a minimum of 10 years and have not remarried you may qualify for benefits based upon your ex-spouses record. This can apply even if he has not applied for benefits. This can also apply in cases of raising a child younger than 16.
#9 – Health insurance
If you were covered medically under your spouse’s insurance you can COBRA your insurance under the same plan for up to 18 months. This can help buy you time until you find your own health insurance coverage.
#10 – Get advice
Whether you will be receiving monthly alimony or one lump sum payment, you should seek advice from a financial planner or accountant. They can help you form a financial plan and budget to successfully live your new life!
All of these tips will help you live through the financial burden a divorce can be. Follow them and you can still come out ahead.