The pandemic has tested all of us in countless ways, at work, at home, and in our marriages and partnerships. Nearly one third of couples — 31 percent — say that the COVID has negatively impacted their relationships, and the US has seen divorce rates “skyrocket” during the pandemic. And although things are tough right now, no matter when you consider ending your marriage, divorce is a huge decision, with significant personal and financial implications, explains Sharon Klein, family wealth expert for the Wilmington Trust, Eastern Region. “It is especially critical for women who have not had financial experience to have skilled advisors to educate them and guide the decision-making process,” Klein says.
If you’re considering filing for divorce this year, pay close attention to these six tips in order to make the process as seamless — and hopefully as painless — as possible.
Build Your Team
One of the first and most crucial steps in preparing for divorce is to build a team you trust, says Tessa Elrod, co-owner of Next Step Financial Transitions and Next Step Divorce Solutions.
“Start to think about the team that you want to build,” Elrod says.
Elrod recommends meeting with a therapist in order to manage the emotional effects of going through a divorce, consulting with a local CDFA, and meeting with a local family law attorney or mediator.
“A trusted team of experts, which typically includes a matrimonial attorney, a trusts and estates attorney and a financial advisor, can make the divorce process less daunting,” Klein says.
If you do not manage the finances in your household, it is important to make sure you develop an understanding of your assets and liabilities so that you can be as informed as possible after you consider and decide to go through with the process of a divorce.
Elrod recommends gaining a better understanding of how much money you have as well as the cost of living in your area. Knowing your financial situation well will ultimately help you to more seamlessly go through your divorce.
Review Your Expenses
Beyond gaining an overall knowledge of your financial situation, it is vital that you understand your expenses when going through a divorce. Comparing your expenses to the amount of money you will be getting from your settlement will help you build your financial future.
“An important step in the divorce process is projecting how a proposed settlement will sustain a woman’s lifestyle, whether she’s receiving a lump-sum payment or regular payments,” Klein says. “This includes accounting for additional expenses for children, such as summer camp, college tuition and future education funding, hobbies, etc.”
Elrod recommends that her clients make sure that they have paper copies of different financial documents while considering a divorce.
“I tell them to put on their private detective hat and think outside the box on where they can access information if they don’t have access to it because they’ve been forcibly locked out,” Elrod says.
Klein offers similar advice, and suggests performing a review of various documents, including estate planning documents and beneficiary designations.
“While some planning might have to wait until the divorce decree is final, documents such as wills, powers of attorney and health care directives, can and should generally be updated while divorce is pending, so a soon-to-be ex-spouse inherits the minimum possible and is not in a position to make important financial and health care decisions for you,” Klein says.
Get a bank account in your own name
Especially if you have never managed your finances before, it is crucial to open a bank account in your own name in order to improve your financial future.
“Women should open accounts in their individual names so they have cash available, and they might need to establish or improve credit,” Klein says.
Review prenuptial agreements
If you have a prenuptial agreement, it is necessary to conduct a review of it before going through with your divorce so that you have a better understanding of the benefits and limitations of the document.
“If women have an existing prenuptial agreement, they should carefully review the agreement with an advisor to see what rights – and obligations – are incorporated,” Klein says.
Going through a divorce is a challenging and highly personal thing. These tips will help you to stay grounded and as informed as possible throughout the process.
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