Ending a marriage or de facto relationship can be emotionally taxing and financially complex. Along with the emotional challenges, the legal and financial intricacies that accompany separation of asset’s are often overwhelming. While many aspects need consideration, we highlight critically import money matters that may require a degree of courage to address during this tumultuous time.
Five Key Financial Steps to Consider During Divorce
1. Inventory Assets and Liabilities:
Start by creating a detailed list of all assets (bank accounts, investments, real estate, superannuation, collectables, digital assets etc.) and liabilities (mortgages, loans, credit card debts, etc.). This will give you a clear picture of your financial standing and is essential during property division negotiations.
If you have joint credit cards or loans, discuss with your ex-spouse how these will be handled. Closing joint accounts and opening individual accounts can help protect your credit and financial future.
2. Re-Evaluate Your Budget:
Your financial situation and needs will change post-divorce. You might have to manage with a single income or handle additional expenses. Redraft your budget to adapt to your new circumstances.
3. Update Beneficiaries:
Most people forget that financial products like life insurance, superannuation accounts, and other investments often have named beneficiaries. Ensure these reflect your current wishes to prevent unintended disbursements.
4. Collaborate with Financial and Legal Experts:
An experienced financial planner can act as your advocate guiding you in the restructuring of your finances, while an attorney can ensure your rights and assets are protected. Their expertise is invaluable in navigating the complexities of divorce.
5. Estate Planning: A Crucial Step
Estate planning might seem like a concern for the distant future, but during a divorce, it's of immediate importance. Here's why:
- Wills and Trusts: Review and possibly revise your will. If you have established trusts, evaluate their terms to reflect the changes in your marital status.
- Power of Attorney: If your ex-spouse had the power of attorney, consider revoking it and assigning someone you trust.
- Healthcare Proxy: Ensure the person responsible for making medical decisions on your behalf is someone you currently trust.
Divorce is undeniably challenging. By proactively addressing your financial and estate planning needs, you can create a stable foundation for your future. Remember, seeking professional advice during these times is not an expense but an investment in your peace of mind and financial security.
*Disclaimer: This newsletter is for informational purposes only and does not constitute legal or financial advice. Please consult with professionals for guidance tailored to your specific situation.*
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Posted in Insight Money at 01 October 23