10 Steps to a Money-Smart Divorce (Part 2 of 2)

by Norris Law Group on January 14, 2014

divorce_money_penIn the midst of a divorce, “number crunching” is probably one of the furthest things from your mind. Emotions such as anger, anxiety and fear may take over, and you may be far more focused on the past and present rather than the future.

Financial educator Ruth Hayden, author of For Richer, Not Poorer: The Money Book for Couples, concurs: “At least 80 percent of money is about self-management, about emotions, and 20 percent is about quantifying and computing…The counting part is easy; it’s the emotional part that’s hard.”

Money is often cited as a leading cause of divorce, so it may stand to reason that the financial aspects of divorce may not be easy. Jay MacDonald offers 10 Steps to a Money-Smart Divorce at Bankrate.com. Our previous installment included the first five steps. The second five appear below:

6. Change those beneficiaries. If you fail to update your beneficiaries and marital status on important documents such as your will, trusts, pension plans, IRAs, and insurance policies, your ex-spouse might end up with these benefits in the event of your untimely demise. Additionally, take time to review each account and policy to ensure that they fit with your new circumstances.

7. Reclaim your name. If you plan to go back to your maiden name, you may be required to produce the divorce decree or document signed by your ex-spouse acknowledging the name change so that you can obtain a new driver’s license, passport and other identification. Alert your personal “network” of the name change as well (employer, doctors, children’s school, landlord/mortgage holder, pharmacist, mail carrier, insurers, clergy, etc). Change your name with the Social Security Administration and adjust tax withholding if necessary.

8. Check your retirement. If you are at least 62 and were married for at least 10 years, have been divorced for more than two years, have not remarried and do not qualify for an equal or higher Social Security benefit yourself, you may be entitled to receive Social Security benefits based on your ex-spouse’s Social Security record, even if your ex has not applied for benefits that he or she is eligible to receive. If you remarry, these benefits would end, unless the new marriage ends. If you are raising a child younger than 16 years old born as a result of the marriage, you may receive benefits on your ex-spouse’s record even if you were married for less than 10 years. You may be able to expect the same benefit you would have gotten if you had stayed married, and possibly all of it if in the event of the death of your ex-spouse. Your benefits would also not affect amounts due to your ex’s current spouse.

9. Guard your health coverage. Divorce may force one party in a marriage to give up health care coverage. But just one medical emergency can drain your finances. COBRA, the Affordable Care Act (“Obamacare”) or Medicaid may all provide avenues to health coverage. Ruth Hayden says, “You can’t afford not to think about things you need such as health insurance, disability and life insurance…If you can’t afford all these things, you really should consider getting rid of the house and downsizing.”

10. Dust yourself off and start living. Once the “smoke clears” and your divorce is final, do not go on a spending binge. Rather, devise a financial plan which will help secure your future. Bankrate.com offers a great deal of free advice. You may also wish to consider hiring a professional financial planner. Living well is possible whatever your net worth or marital status.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County and throughout Utah in the area of divorce. Contact them today at 801-932-1238 or online for a free consultation.

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