Divorce is one of the most stressful and emotional transitions you can face, and can often come with financial surprises. It is important to prepare for your financial future so the burden does not haunt you until retirement. Here are some ways to protect your financial future after divorce:
Financially preparing for the divorce and separation as soon as possible is the best way to go. Make copies of important documents such as pay stubs, tax returns, financial account statements, life insurance policies and loan documents and agreements, and begin organizing all of this information. Start tackling your finances during the divorce process, not after. Get separate bank accounts and credit cards, and be sure to cancel all joint credit cards and accounts. This way you can establish your own credit history and will not be held responsible is your ex-spouse fails to pay any credit card bills. As you negotiate the divorce, be sure that the mortgage, utilities and other bills get paid on time so you are not penalized.
Create a new budget for yourself for after the divorce. You will have less monthly income to use in your current lifestyle, so decide what kind of changes you need to make in order to better afford the single life. Consider expenses such as household, automobile, children, insurance, and other debts. Even if it’s in the divorce agreement, you can’t always count on your ex-spouse to pay the amount they are supposed to, or pay on time, so it’s important to know where you stand financially. Building an emergency fund from any cash you receive from the divorce is a great way to protect yourself from financial surprises or emergencies. This fund should equal 3-6 months of your living expenses for enough cushion during financial hardships. Having an emergency fund will also prevent you from racking up credit card debt.
Consult with a Phoenix Divorce Lawyer at The Sampair Group to discuss protecting your real assets such as cars, real estate and personal property. It is rare that couples in a divorce get a fair settlement when it comes to assets, so you should seek to resolve the splitting up of assets as fair as possible. Seeking outside counsel is also important when it comes to medical insurance. It is very important to discuss coverage for you, and any children involved, after the divorce. As for social security, you are entitled to 50% of your spouse’s benefits if you were married for at least 10 years if that amount is greater than your own benefits. This applies even if your ex remarries, but not if you do.
Be sure that you revisit and evaluate your beneficiaries. If you do not remove your former spouse as your primary beneficiary on retirement and investment accounts, they will receive all of that money in the even of your death. These policies must be changed themselves, as just making changes on your will does not protect these funds.
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