Financial Planning For Women: Dealing With Death & Divorce

There are many events in life that have a dramatic impact on our future. As a woman, the unfortunate circumstances of a divorce or death of a spouse can leave you with a lot on your plate, and while the finances may not be the first thing you want to take care of, making the right financial decisions today can make your life easier in the future.

Dealing With Divorce and Protecting Your Assets

Quite simply, divorce can be one of the most financially destructive events in your life if you do not take the proper steps during the divorce process. Naturally your first step should be to hire a divorce attorney. In addition, when it comes to how your assets and property are split, it may depend on the state you live in. When it comes to divorce, there are two types of states: Community property and equitable. Community propery means that all assets are split equally with your spouse. The following states are considered “Community Property” states:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

In the rest of the states, assets are ultimately divided up equitably.

Steps To Take In Preparation for Divorce

  1. Organize Your Financial Records: In short, having this information readily available for your attorney will save you time and money. Here is a list of key documents and information to gather: Social Security numbers, children info (names, DOB) when and where you were married, length of time at current residence, any prenuptial agreements, information about previous marries and children, financial records (life insurance, all assets, employee benefits, etc…), occupation information. Also, make sure that you make copies of these documents and put them in a safe place where your spouse does not have access to them, such as a parent’s or friends house, or safety deposit box.
  2. Get a P.O. Box: During this time, you will be receiving confidential information from your attorney in addition to new bank and financial information. Accordingly, you want to start receiving your mail in a private location away from your spouse.
  3. New Financials: You need to start getting new accounts in your own name. This includes new bank accounts and new credit cards. Most likely, your attorney will recommend that you withdrew your portion of the joint funds (as dictated by the state law). Therefore, you will want to take your portion of the funds and put it into a new checking/savings account. Whatever you do, do not put this money in a financial vehicle where your funds are locked up, such as a CD. You will need access to this money for everyday expenses and lawyer fees. These expenses can add up quickly, so you want this money readily available.  In addition, you should get a credit card in your own name to establish your own credit and to help out with any expenses.
  4. Inventory Your Personal Records and Property: Simply, any assets or property that you owned before the marriage is separate property that will remain yours. Therefore, you want to make sure that you have accurate records of any inheritance you received, gifts, and even your engagement ring since it was technically received before the official marriage.
  5. Get Emotional Support: This is an extremely tough time in your life. One of the best things you can do for yourself to get through it all is to seek support from friends, a support group, or a therapist.

Some additional Do’s and Don’ts

Do…

- Review your previous taxes and make sure all taxes have been paid
- Prepare your own budget to properly plan your finances to get your through the divorce proceedings.
- Check the contents of any safety deposit boxes
- Make copies of your financial statements for your attorney

Don’t…

- Sign or do anything major (such as move out of the house) without consulting your attorney first
- Quit your job
- Do anything with joint assets, such as give them away.

This is obviously not a complete list of everything that will need to be done during this difficult time. Your attorney will be your primary point of contact, so if you have any questions regarding the Do’s and Don’ts of how you should proceed, you need to contact your attorney immediately. In addition, you should also be getting your own financial plan in place with the help of your financial advisor.

Dealing With The Death of a Spouse

If you have lost a spouse, we would first like to offer our condolences. This is an extremely difficult time and we know everything can seem overwhelming at the moment. Would like to offer the following information to make your future a bit more manageable in regards to how you need to proceed with estate planning and your overall financial situation.

Obviously after you notify all of the important people in your life, one of the most important things you can do is stay calm and not make any rash decisions. There are 3 main professionals that you need to reach out to who can help keep things organized for you:

  1. Your Attorney: He/She can help you go through your spouse’s will and get your estate in order
  2. Funeral Director: The funeral director can provide you with the official death certificate and the necessary paperwork for any Social Security or veteran benefits.
  3. Your Financial Advisor: Your advisor is one of the few trusted professionals in your life. They are there for you during all of the stages of life that need to be planned for. They will be able to help you manage this tough time and make sure that you have a financial plan setup to provide you with security moving forward in your life.

When you meet with your financial advisor, they will be able to get you on a current budget and make both short term and long term financial planning recommendations. In the short term, you are naturally going to have some expenses, between the funeral itself, and everyday life expenses. If you are relying on any life insurance proceeds to provide you with the funds to cover those expenses, you should receive them relatively quickly (within a few days of filing). If you have bills that are due, especially with any creditors, you should absolutely call them and try to get an extension on your payment date.

In the long term, your financial advisor can help you with your retirement planning and any other goals/needs that need to be planned for. If you are receiving a lump sum payment from life insurance proceeds, you want to make sure that those funds are used efficiently. Should you pay off your mortgage? Your car? Your kid’s college tuition? Should you invest it for retirement? Which type of financial vehicles should you use for your investments? These are just some of the questions and predicaments that you will be faced with. It is of critical importance that you get this part right because making the wrong investments and financial decisions now can have lasting repercussions that will be felt years from now. Your advisor is here for you now and in the future, to make sure you are always making the smart financial decisions for you and your family.