The Financial Challenges of Divorce

The negative reputation that surrounds divorce is often well deserved. The dissolution of marriage can be mentally, physically and financially challenging. This reality is especially true when spouses are uncooperative and at odds with one another. To be sure, many individuals are unprepared for the financial burdens that often accompany a divorce, but advanced planning makes the transition easier for the entire family.

A recent article in the Huffington Post provides advice about financial preparation for divorce. The suggestions include:

• Consider your options – Creating a budget gives you a clear picture of your financial situation. Review all of your debts and determine how much money will come in and go out after the divorce finalizes. Adjust your spending habits to fit into your new budgetary needs. It is advisable that you create an emergency fund that equals three to six months of living expenses. After the divorce, you will no longer have a second income to fall back on in case of job loss or sickness. An emergency fund can ensure your family’s financial security during rough times.
• Change the beneficiary designations on your accounts, retirement benefits and insurance policies – Your attorney can assist you with identifying your options and deciding which alternatives are best. Work towards an amicable division of your shared assets by closing joint bank accounts and credit cards. Open individual accounts to protect personal assets.
• Create a new will – Many divorcing individuals forget to address their will, but neglecting this important legal document can result in your ex claiming assets that you intended to leave for other loved ones.
• Monitor your finances – Keep a close eye on your credit reports to prevent any unauthorized activity. Your spouse may know your Social Security number. With the assistance of a credit monitoring service, you can ensure that your spouse is not opening unauthorized accounts in your name, which can result in a poor credit score rating.
• Consider a financial adviser – If you did not control the purse strings during your marriage, the task of money management may seem daunting at first. Though it is an additional expense, the assistance of a financial adviser can prove beneficial in the long run.
• Don’t forget that you want to retire one day – Especially for spouses who did not work during the marriage, the responsibility of retirement planning may become overwhelming. While you are overhauling your finances, start building or adding to your retirement savings. If you are granted part of your spouse’s retirement benefits, make sure that these assets and documents are transferred in a timely manner.

It is extremely important that you prepare for your financial future after divorce. An experienced attorney is vital to helping you navigate the process. Contact a divorce attorney at the Law Office of Elizabeth J. Chacko, P.C. today for a consultation. Serving clients in Naperville, Wheaton, and Downers Grove, our capable attorneys are available to assist with all of your divorce needs.