Print Posted by Joseph Sroka, CFA, CMT on 03/20/2017

Divorce Financial Checklist

Divorce Financial Checklist

Divorce is a major life event that can prompt many changes beyond just your marital status.  Major life events often require you to make changes to your budget as well as your financial and investment accounts, both in terms of administration and implementation.  By taking the time to review and make these necessary changes, it can help you start this new chapter of your life on a good foot and avoid headaches down the road.

Set a new Monthly Budget.  As one household splits into two, they each require their own budget.  Make sure you are covering all your obligations such as housing, car payments, groceries, child care, insurance, and other monthly expenses.  You should also make allocations toward both an emergency fund and retirement savings.

Set up an Emergency Fund.  Your monthly cash flow may be a bit erratic at first, especially if you are counting on payments from your former spouse to cover some expenses.  Having up to two months of income set aside in an emergency fund can help smooth cash flow and function as a buffer for unexpected expenses that may arise.

Continue your Retirement Planning.  As part of the divorce you may be granted a portion of your ex-spouse’s retirement assets.  This can be an essential base to your own retirement planning.  Make sure the assets are transferred into a tax-sheltered account, such as an IRA rollover, and that the assets are invested to benefit your long-term goals.  If you are required to give away part of your retirement assets to your ex-spouse as part of the divorce settlement, you need to rebuild those assets.  Check what options are available in the retirement plan with your employer as well as after-tax options such as an individual retirement account or Roth IRA.

Reassign Beneficiaries.  Your life insurance policies, individual retirement accounts and business retirement plan accounts (401k’s, etc.) all allow you to list a beneficiary.  Your existing beneficiary may be your former spouse and that may no longer be your intention.  Now is the time to think through who you would like to be a beneficiary such as children, siblings or even a charity.  You may also want to consult a trust and estate attorney to change your Will.

Protect your Identity.  Make sure you have control over all items that you are responsible for.  Cancelling or suspending all joint bank, credit and investment accounts can make sure your former spouse doesn’t do anything to harm you financially.  Likewise, make sure you have clear ownership of all assets that belong to you by making sure your home and car titles are in your name.  Your former spouse had access to your personal information.  Take steps to safeguard yourself.  Protecting your identity is also a key component to maintaining a good credit score.

Monitor your Credit Score.  The divorce process may have caused havoc on your finances.  Credit card bills or other payments may have been skipped and there may be credit outstanding for one or both partners that isn’t being maintained.  You will now have to stand alone on your own credit worthiness, so knowing your credit score and ways to improve it is a valuable process.

Seek the help of a Professional.  Like the attorney you hired to guide you through your divorce and represent your best interests, there are financial professionals that can assist you in making the necessary changes with your financial and investment accounts.  An experienced Investment Adviser can work with you to realign your investment assets to suit your new life, advise you on managing your debt load (mortgage, student loans, etc.), and help you plan for the long-term.   

The emotional distraction of a divorce can often leave personal financial and investment issues on the back burner.  It is vital to review and make the necessary changes outlined here to safeguard for your future.

----------------------------------------

Joseph Sroka, CFA, CMT

Chief Investment Officer, NovaPoint Capital
Atlanta, Georgia

 

Joe is the Chief Investment Officer at NovaPoint Capital, a Registered Investment Adviser firm in Atlanta.  He has 20 years’ experience in the investment management industry. Prior to founding NovaPoint, Joe was a portfolio manager at Spectrum Advisory Services and GMT Capital in Atlanta and Epoch Investment Partners in New York. He has also worked as an equity research analyst at Merrill Lynch and ABN Amro. Before beginning his investment career, Joe was an Infantry officer in the U.S. Army. Joe holds a BS from the U.S. Military Academy at West Point and an MBA from the University of Chicago. He is both a Chartered Financial Analyst (CFA) and a Chartered Market Technician (CMT).

 

NovaPoint Capital LLC
201 17th Street, Suite 300, Atlanta, GA 30327 | Phone: 404-445-7885jsroka@novapointcapital.com  

NovaPoint Capital manages investment portfolios for individuals, family offices, corporations, and non-profit organizations.  It also provides advisory services to ERISA qualified plans such as SEP/IRA, 401(k), Profit Sharing and Defined Benefit for small to mid-sized businesses.

Contact This Member