You might view divorce as a series of distinct steps: filing the paperwork, negotiating with your ex, getting a settlement and reaching the end of your marriage. Yet still more work—sometimes lots of it—remains after your divorce.
First, your settlement agreement likely stipulates actions and tasks that you must finish, often under deadlines. Develop a checklist with each action item, task owner (or help needed), and due-date, with room for comments and additional steps.
Notify the proper channels of any major changes.
The court may not specifically set the deadline for other post-divorce activities that you nonetheless need to complete. For example, if resuming use of your maiden name, you need to call your credit card companies and banks to ask about documentation requirements (probably a copy of your divorce decree or other legal paperwork).
Paperwork associated with name changes can take time, so make a list of all of firms, individuals and policy administrators who need to know about your name change, such as the human resources department at the Social Security Administration and your employer’s office, school administrators, investment advisor, insurance company and doctors.
Create new estate plans.
You will need to create a new estate plan, and your joint trust must be revoked–ask your attorney when to do this. Review existing beneficiaries for your will, life insurance and bank and retirement accounts. You may need to draw up a new power of attorney (POA) for someone to handle your financial affairs if you are unable to, revise your medical directive (AHCD) and assign custodians for underage children in case both you and your ex-spouse die unexpectedly.
Track funds’ transfers.
You may be required to transfer some or all of your individual retirement accounts, 401(k)s or pension plans to your ex-spouse, or vice versa. Administrators of qualified plans such as 401(k), 403(b) or pension plans require court-signed qualified domestic relations orders (QDROs) to begin any transfers or to divide a pension plan – and won’t accept any documents that don’t conform to the plan. Carefully track the movement of the accounts involved.
If you are to receive transfer of IRA or 401(k) money, you must decide where the funds will go. If you don’t currently have an IRA, be certain that you open the correct type. For example, if you are receiving funds from a Roth IRA, open a Roth IRA; if receiving funds from a traditional IRA or a 401(k), open a traditional IRA.
To ensure you receive transferred funds without incurring taxes, transfer funds (if the plans allow) to your IRA or current 401(k), from custodian to custodian.
Document any transfers and save the paperwork for tax filing and other purposes.
Pre-plan to sell property.
If you are required to sell your marital home, start preparing for the sale. Engage an experienced real estate agent to help you determine where to improve the home to fetch the best price. Make sure you agree to split the cost for the improvements. If you have already moved and your ex-spouse still lives in the home, make arrangements so you can remove any remaining items.
Keep good records.
Retain all documents relating to your divorce, such as the decree, the settlement agreement and other divorce-related documents. Keep copies that prove you performed the actions that the settlement agreement required on time.
Also keep copies of receipt or payment of support, including child support, children’s expenses and property.
Plan for the future.
Even before the divorce, working with a financial advisor with divorce planning experience can give you confidence in your settlement. An advisor can also help make sure you are able to qualify for a mortgage, if needed. As you set new goals, your financial plan and investment strategy will likely need to change to support achieving them. Working on your post-divorce plan prior to finalizing your divorce can go a long way to helping you make informed decisions.
Working with an experienced team of financial advisors with experience in divorce planning can give you the confidence you need to move forward. Contact Team Hewins for peace of mind and clarity with your financial wellbeing.
From: “Post Divorce Critical Actions.” FMeX. 2017. https://fmexcontent.s3.amazonaws.com/4370/4370.pdf
Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. The information contained within this letter is for informational purposes only and should not be considered investment advice or a recommendation to buy or sell any types of securities. Past performance is not a guarantee of future returns. It should not be assumed that diversification protects a portfolio from loss or that the diversification in a portfolio will produce profitable results. The opinions stated herein are as of the date of this letter and are subject to change. The information contained within this letter is compiled from sources Team Hewins believes to be reliable, but wecannot guarantee accuracy. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas.