Divorce has a huge impact on your finances. From necessary expenses, such as legal fees spent to protect your rights, to transitioning to a single income household, you’re almost certainly going to have to make changes to your budget. Watching your spending isn’t the only thing you need to do to secure your financial security, though. Take the following steps to build a solid foundation for your future:
1. Obtain a certified copy of your divorce decree.
A divorce decree is the court’s final order that makes your divorce official. You’ll need it to prove you were divorced if someone tries to hold you accountable for anything your former spouse does in the future. Lenders will also want to see it because it’s the only way they have to verify child support or alimony that you may be paying or receiving. Make extra copies, and store them in a secure location.
2. Establish your own bank accounts.
If you still have joint bank accounts, your former spouse may still have access to your money. Close or have your name removed from any joint accounts. Then open your own. If you stay with the same bank, they can probably do everything at once. Just be sure that any money transfers comply with the court’s orders.
3. Revisit your estate planning documents.
In most states, provisions regarding divorced spouses are automatically invalidated. However, you’re probably going to want to replace them with someone else, especially when it comes to powers of attorney for medical care. You may also want to change your will’s executor or disinherit other members of your former spouse’s family.
4. Update your mortgage.
Be sure your mortgage is refiled with the proper name. If you’re not paying, you don’t want to have a bank later try to hold you responsible for it. If you are holding it and leave your former spouse on, they might be able to fraudulently sell your house.
5. Review your insurance policies.
If you had life insurance, do you still need it or do you want to change the beneficiary to your children? Also make sure you are on your own health insurance policy, have your former spouse removed if they were on yours, and make sure your children have coverage on either your policy or your former spouse’s.
6. Build your credit.
If you only had joint credit cards or loans, your credit history may be erased when those accounts are closed. Open up new credit cards as soon as possible to build your own score. If at all possible, do this before your current accounts are closed so you still have a strong credit score when you apply.
7. Track your finances.
Keep close records of child support, alimony, and medical expenses. First, it will help your budgeting, and more importantly, you’ll have proof in case of future disputes. If you ever go to court over these payments, the first thing the judge will want to see is bank records, canceled checks, and other documentation of what money was transferred and why.
8. Selling assets? Consider taxes.
If you’re dividing assets that you may want to turn into cash or selling assets with your former spouse with the goal of splitting the cash proceeds, be sure to consider the tax consequences. Special tax rates on real property and investments could greatly alter the value of your assets. Remember that retirement accounts may also be subject to penalties if you close them.
9. Get professional help
If legal fees and court costs have been piling up, hiring more professionals might be the last thing you want to do. However, an attorney may prevent you from missing out on important rights or help you come up with an estate plan that keeps more of your assets in your family, and end up saving you money in the long run. Call the experienced attorneys at Wall & Wall, who will look out for your financial future when they help you with your Salt Lake City divorce.
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