Planning After a Divorce ... What's Next to Protect Your Family
Make Estate and Financial Planning a First Step After Divorce
After a marriage breaks up, about the last thing most people want to do is sit down with one
more attorney. But no matter how old you are or whether you have kids, it’s important to consult
both financial and legal experts to make sure you have an updated estate and financial plan for
your new life once the divorce decree is final.
It’s also best to blend estate planning with financial planning post-divorce. If you weren’t working
with a financial or estate planner during the divorce process, it’s time to do so now. The
immediate months after a divorce can be disorienting – even if you don’t move, you are literally
starting a new household that you will have to direct yourself, and that means new money
issues to face.
This is why the weeks immediately after a divorce are a good time to revisit short- and long-term
spending and planning goals. Here’s a general road map to that process:
Start with a financial planner: Whether you plan to stay single, remarry or move in with a new
partner, it’s good to get a baseline look at your finances as early as possible after the divorce is
final. Expenses for the newly single can pile up quickly and unexpectedly, and a financial
planning professional can help you review your new current spending and savings needs,
compare strategies to achieve long-term goals like college and retirement and give you critical
tools to protect your assets and loved ones if you die suddenly. Even if you have a good
relationship with an ex-spouse and you addressed key issues for your children as part of the
divorce proceedings, you need to revisit all these issues as a single individual before you move
on to the next stage.
Talk with a trained estate planning attorney about wills and other critical documents:
True, there are software programs and other kit solutions available to write basic wills, powers
of attorney and certain simple trust agreements. But it makes sense to coordinate the activities
of a financial planner with an estate planning attorney who can tailor an overall estate plan
specific to your needs no matter how basic they might be right now. Even if you are very young
with few assets, it makes sense to get some solid advice in this area so you’ll be able to
manage such planning as you age and your finances get more complex. Particularly if you have
kids, such planning is important if you plan to remarry and if you want to guarantee that specific
assets are guaranteed for them when you die. In some cases where a spouse dies unmarried
with minor children, an ex-spouse might automatically gain control of assets that were supposed
to be earmarked for the kids. If you don’t want that to happen, you need to plan for that legally.
plan how money and assets
will go to your children if you or your ex-spouse die suddenly or are incapacitated. If your
children are minors, it’s particularly important to make sure you and your ex-spouse have a
guardianship plan for their upbringing as well as any assets they may inherit. You might
completely trust your ex-spouse’s new husband, wife or partner to raise your kids if your exspouse
dies before you, but there may be others better-equipped to do so – spell that out now.
Also, if there are any trust or wealth issues that will become effective for your children once they
reach adulthood, it’s also important to establish an efficient legal structure for distributing those
assets as well as appointing a trustee in a will to train and guide your kids through that financial
transition.
Plan for special needs kids: If one of your children is disabled and is expected to need lifetime
assistance of some type, then you should consult a qualified attorney to help you create a
special needs trust. It will help protect your child from having to give up any public or social
financial assistance as well as access to special doctors, medical help, special prescriptions or
treatments that could be taken away if they were to personally inherit assets that would
disqualify them for these programs. When such assets are held in trust, they are not counted as
the child’s assets. The advantage is that those inherited assets may still be used to support their
housing or other personal living needs without adversely impacting qualifying for government
aid programs.
Get solid protection in place: Most people focus on what may happen to their health
insurance if they get divorced, but insurance issues like life, property/casualty and disability
insurance are sometimes put on the back burner. If you’re newly single, you definitely need the
best health coverage you can afford for yourself and your kids, but life, property, liability and
disability insurance becomes doubly important, particularly if you failed to address those needs
during the divorce. Even if your ex-spouse is cooperative with financial support, it’s wise to
insure yourself as if they weren’t. A financial planner should be able to go through those options
in detail.
Review all your investments for primary ownership and beneficiary information: Even if
you were advised correctly to change the names on assets you and your spouse were dividing
between yourselves, it still makes sense post-divorce to review that the names are indeed
correct on those assets, and most important, to make sure all beneficiary information is correct.