Going through a divorce can be one of the most trying times you will experience, emotionally as well as financially. To minimize financial stress and ensure a smooth transition, it is crucial to have a divorce financial planning checklist. This checklist should include all the necessary financial paperwork and steps that need to be taken before and during the divorce process.
The following are some essential items to include in your divorce planning checklist.
Gather all financial records
Before starting the divorce process, make sure you have copies of all the financial records, including bank statements, tax returns, investment account statements, retirement account statements, mortgage documents, credit card statements, and any other financial records. This information will be critical for determining assets, debts, and income.
Assess your assets and debts
Make a list of all your assets and debts, including real estate, cars, investments, credit card debt, mortgages, and loans. Determine which assets are marital property and which are separate property. Marital property is subject to division during divorce, while separate property is not. Knowing your assets and debts will help you and your attorney negotiate a fair settlement.
Determine your income and expenses
Compile a list of your monthly income and expenses, including rent/mortgage, utilities, food, transportation, and any other expenses. This will help you determine how much money you need to live on after the divorce.
Close joint accounts
Close all joint accounts with your spouse, including bank accounts, credit cards, and any other shared accounts. This will prevent your spouse from accessing your money or creating additional debt. You will want to make sure your attorney is informed of this before you close joint accounts.
Create a budget
Develop a budget for your post-divorce life based on your income and expenses. This will help you determine if you need to adjust your lifestyle or seek additional income.
Determine child support and alimony
If you have children, determine the amount of child support and alimony you may be entitled to or required to pay. Child support and alimony can have a significant impact on your finances after the divorce.
Update your estate plan
Update your will, trust, and any other estate planning documents to reflect your new circumstances. You may need to change your beneficiaries, executor, or guardian for your children.
Divorce can have a significant impact on your taxes. Consult with a financial professional to determine how the divorce will affect your tax situation and if there are any tax strategies you should consider.
Deal with health insurance coverage
Figure out how you will obtain health insurance after the divorce. You may be eligible for COBRA or may need to obtain insurance on your own.
Protect your credit
Monitor your credit report regularly to ensure your spouse is not opening new accounts or making unauthorized charges. You may want to consider freezing your credit to prevent any new accounts from being opened without your knowledge.
Seek professional help
By following this divorce planning checklist, you can protect your finances and ensure a better financial future for yourself and your children. Also, seeking the help of a divorce attorney can be beneficial in navigating the complex process of divorce. Additionally, talking with a professional financial advisor can provide you with the guidance needed to prepare you for dealing with your finances after the divorce has been settled.
Purposeful Wealth Advisors is regarded as one of the best Chicago divorce financial planning firms. Get in contact with one of our professional advisors now.