Three tips for success after a divorce is finalized
Once a divorce is finalized an individual can begin his or her life anew. Although some may find it tempting to move forward without a second thought about the divorce, it is wise to tread carefully. A divorce is a major life event. As such, it can have a tremendous impact on your financial wellbeing.
There are some steps that can be taken to help to mitigate the impact. Three tips include:
- Have a solid divorce settlement agreement
- Update estate plan documents
- Adjust investments and portfolios
Although these tips provide some guidance, additional elaboration is more helpful.
The first tip: A strong settlement agreement can make a world of difference
As noted by The Woman’s Law Center of Maryland, putting together a separation agreement without legal counsel is risky. The language of this agreement dictates how a number of assets are separated after the divorce is finalized. Missing a single document or using a boilerplate, generic document can cause future problems.
The importance of a strong legal team during the divorce cannot be stressed enough. The financial experts at Forbes also caution against moving forward with a divorce without legal counsel. Finding an experienced attorney takes the top spot on their list to better ensure financial success after a divorce is finalized.
The second tip: Review estate plan documents
Estate planning documents including a will and trusts, do not generally update when a divorce is finalized. It is wise to take a moment to review these documents and make sure that assets are set up to distribute as intended. This can help to ensure an ex does not get asset that you would prefer transfer to children or other loved ones.
It is also wise to review beneficiary designations. Accounts like savings accounts and some retirement documents transfer through the use of these designations. These designations are generally found on a form that includes a spot for the owner to list a name of who should receive the asset. Changing the designation is often as simple as changing the name on the form. Without this step, the asset will transfer to whoever was listed when the form was initially filled out.
The third tip: Adjust investments
The investment strategy that is now in place is likely one that was developed while married, potentially with two incomes. Review your investment portfolio. If you already know how much you intend to save prior to retirement, recalculate the amount you need to invest each month to better ensure you meet your goals.
Another important note about retirement: make sure you have all the needed documents. For many retirement accounts, a divorce settlement is not enough. Separate documentation, such as a Qualified Domestic Relations Order (QDRO) is required. Without this paperwork, you may not receive your share of retirement assets as expected. As explained in the first tip, an experienced legal team can help to better ensure all necessary documents are present.