When you get divorced, your finances will probably shift dramatically. If you make a financial mistake, it can end up costing you dearly in the end.
Divorce is something that roughly 50 percent of married Americans find themselves navigating and once January arrives, divorce attorneys across the country see an uptick in divorces – which is why it's been coined "divorce month."
At our firm, we definitely see a spike after the first of the year, and Joslin Davis, the president of the American Academy of Matrimonial Lawyers agrees. "People just really don't want to do anything during the holidays – for emotional reasons, primarily," she said.
As much as people just want their divorce to be over, rushing through the settlement phase can be a grave mistake. That's why we recommend that our clients take the time to consult with their CPA and financial advisor while at the same time, consulting us.
In this blog, we are going to touch upon one of the most common financial mistakes made during divorce: staying connected to your spouse.
Cutting the 'Financial Ties'
When couples divorce, they must be aware that joint financial accounts and beneficiary designations that link them to each other are serious liabilities. A bitter spouse can empty the joint bank account of all its cash, or they can max out the credit cards, among other things
Early on in a divorce, you should make a point of dividing your finances. You can do this by pulling your credit reports to unlink any joint debts, and you can open a new bank account in just your name.
If your spouse is a wasteful spender, you want to ensure that he or she does not have access to your credit cards, otherwise, you could regret it.
Take a look at the outstanding balances on your credit cards. Then, call the credit card companies and remove the authorize users (your spouse) or close the joint credit card accounts.
We also recommend alerting your health insurance company that you're divorced. Some states hold ex-spouses liable for their estranged spouse's medical bills if they are not notified of any coverage changes.
In closing, don't forget to change your beneficiary designations on all retirement accounts, life insurance policies, bank accounts and annuity contracts.