Financial Tips for Women Going Through a Divorce

Divorce can trigger many unsettling, uncomfortable and frightening feelings and emotions. Whether you were blindsided by the news that your husband wants a divorce, or you’ve been thinking for some time about ending the marriage yourself, it’s likely you’re experiencing significant upheaval.

Unfortunately, these feelings and emotions can lead to making bad financial decisions. The best thing you can do while going through a divorce is to make the financial aspect of your divorce one of your highest priorities. These decisions can affect your financial well-being for the rest of your life.

Here are four things to remember.

Hire professionals

Put together a good team. Consult early with a well-qualified family law attorney to understand your options. A good attorney can help you understand your rights, options and responsibilities. If you meet with an attorney before the announcement of the divorce, it can educate you on the various ramification of future decisions. The attorney can help you understand the various settlement options available and what your best option for you may be.

While a good attorney is invaluable, hiring a financial advisor such as a Certified Divorce Financial Analyst (CDFA®) can be even more important. Most divorce attorneys will agree that they are not financial experts.

A CDFA’s role is to educate you by providing a thorough knowledge and understanding of the complicated financial decisions. They can show you the realistic short and long-term financial effects to make sure the settlement makes sense.

Understand your finances

If you haven’t been aware of your financial situation, you need to catch up. Know what you have and make copies of everything. This includes tax returns, bank and brokerage account statements, mortgages and loan statements, estate planning documents, insurance, property deeds, etc.

Understand your income and expenses. Cinda Jones, a CDFA® in San Diego says, “Capture all your expenses as they are. Don’t try to list your expenses as what you think you need to get by but depict them as they really are. If you don’t accurately capture your expenses, you will present a skewed look.”

Keep an open mind when it comes to your house

To keep the home, you need to have the means to support not only the mortgage payment, but also pay for the real estate taxes, maintenance, utilities and costs. Usually the marital home costs more than what one or the other spouse can afford after the divorce.

While stability for you and your kids are huge considerations, also keep in mind that you need assets to support yourself now and while in retirement.

Secure alimony, property settlement and child support payments with life insurance

Successfully negotiating the dollar amount of your support – child and/or spousal – is only the first step in securing that income. Next you need to insure the payments will continue since alimony payments will end upon the death of your ex-husband. This can be done with life insurance policies. If there is an existing life insurance policy, transfer the ownership of the policy to you. This will insure that there will not be changes to the policy unless you are notified. Simply becoming a beneficiary is not enough.

If you need to purchase a new policy, negotiate the premiums into your settlement so that the supporting spouse covers the cost.

Negotiating divorce is challenging, both emotionally and financially. It’s important to think with a clear head since there are no do-overs in divorce. You could be stuck with the consequences of a bad decision. Using legal and financial professionals who are specifically trained will help you along your journey.

At Blankinship & Foster, we’ve been helping clients navigate life transitions for over 30 years. To learn more about how we can help you, please contact us.

About Teresa Kakadelas

Teresa Kakadelas, CFP®, CDFA™ is a lead advisor and a member of the firm’s Executive Committee. Teresa heads up the firm’s Financial Planning Team, continually identifying and helping solve financial planning issues for clients. Teresa started the firm’s “Wise Women” luncheons, designed to help clients with financial education. Teresa and her family live in Carlsbad. She enjoys traveling, cooking and spending time with her family.

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