Peaceful Divorce

Things That We Don’t Think About After Getting Divorced

Financial issues are a big part of the difficulty of divorce. Being able to identify them can take away some of the pitfalls, stresses, and surprises. Foremost on your mind should be evaluating important post-divorce items such as cash flow and putting together a spending plan.


Here are some of the biggest issues that clients tend to forget about after they are done with their divorce:


  • Review your investment portfolio: Consider what your tolerance for risk will be in your post-divorce life. For instance, you may decide you should be invested more conservatively than you were in the past.


  • Update insurance coverage: Check your life insurance policy to see who is the owner and beneficiary(ies). Update your information on your longterm care and disability insurance, too -- if you want to avoid any surprises in the future.


  • Retirement plans: What is the value of your 401(k) or IRA? who is the beneficiary?

  • Review charitable giving: As a couple, you may have made some compromises on the shared goals of your charity work. As a single person you may want to redirect your energies into something that is your personal priority.


  • College funding: Does the new structure of the family include a plan for paying tuition?


The most important thing to know about living post-divorce is that laws take precedence over your divorce decree. You and your spouse may stipulate certain changes to your existing legal documents in your divorce decree, but if those changes are not executed separately from the decree, they will have no legal weight.


Such documents include:


  • Estate plans: Changes as to who are the trustees or guardians of your estate and your children must be made in separate, legally binding agreements that activate the conditions of your divorce decree - not the other way around.


  • Power of Attorney and Durable Power of Attorney: People often overlook powers of attorney, but that does not detract from their importance. These vital documents need to be drawn up by a professional, separately from your divorce decree. Remember: The law takes precedence over your divorce decree.


  • Healthcare proxy: A healthcare proxy makes healthcare decisions if you are unable to make them yourself. If you were in a coma, who would you want to make those decisions at the hospital? If you rely on your divorce decree instead of the law, it might be your ex-spouse.


  • HIPAA authorizations: The federal privacy law known as HIPAA is something medical professionals take seriously. Under HIPAA, hospitals are required to refuse to give out information on a patient to any third party, without explicit, written permission. HIPAA completely overrides any agreements stipulated in a divorce decree alone.


Speaking to a financial expert like a CDFA or CFP about the financial issues, is the best way to ensure that whatever arrangements made in your divorce decree are official and permanent. What questions do you have about the state of your estate?

 

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