No one goes into a divorce expecting it to be easy, but many people make the mistake of not paying attention to their finances. This can lead to big problems down the road.
Understand your finances
The first step to taking control of your finances is understanding them. This means knowing how much money you have coming in each month and what your savings are. This also means evaluating your debts and assets. If you have joint accounts with your spouse, it’s important to close them as soon as possible. If you have a considerable amount of wealth, you may want to consider getting professional accounting help to avoid making mistakes.
Separate your finances
Once you have a clear understanding of your financial situation, it’s time to start separating your finances from your spouse. This means opening up new accounts in your own name and transferring any assets or debts that are in joint accounts into your own name. For instance, if you have a joint credit card with your spouse, you will want to open up a new credit card in your own name.
Consider your insurance
Your insurance needs will change after your divorce. You will need to update your life insurance policy and make sure that you have adequate coverage. You will also need to update your health insurance policy. If you were on your spouse’s health insurance plan, you will need to find a new plan. Additionally, you will need to update your will and beneficiary designations.
Consider creating a trust
If you have significant assets, you may want to consider creating a trust. This can help protect your assets and ensure that they are distributed the way that you want them to be. There are two main types of trusts: revocable and irrevocable. You can change a revocable trust at any time while you cannot change an irrevocable trust.
Divorce is never simple, but paying attention to your finances can help make the process a bit easier. By taking these steps, you can avoid financial disaster and come out of your divorce in a much better position.