By Scott Tschappat
We don’t say “I do” thinking eventually we’ll be saying “I don’t.” The end of a marriage can be one of life’s most difficult transitions. Emotions can run high leading up to and during a divorce, which is why it’s important to remember that, like marriage, a divorce is a legal event that requires careful thought and consideration, especially when it comes to your finances. If you and your partner have been thinking about getting a divorce, keep these tips in mind as you navigate this complex process.
1. Don’t Hurry Through Your Divorce
First and foremost, don’t rush the divorce process. There are so many difficult decisions to make: property division, child support, parental responsibilities. Each one of these decisions has a long-term impact on your emotional and financial well-being.
Take a deep breath, and take your time making each decision. I even tell my clients to remove their emotions from the equation and think of each decision as a business transaction. This may sound cold, but emotions are at an all-time high during a divorce. It’s critical to calm these emotions and make decisions as rationally as you can.
2. Organize Your Financials
Getting organized before a divorce can help minimize stress and reduce the chances of running into problems down the road.
Start by making a list of all your assets, liabilities, and financial accounts, including:
- Bank statements
- Insurance policies
- Investment accounts
- Estate planning documents
- Tax returns for the past few years
- Retirement account statements
- Loan documents
- Real estate deeds and car titles
You’ll need to gather these items and give them to your attorney. It may also be helpful to divide them up into marital property (i.e., assets and debts obtained during the marriage) and non-marital property (i.e., assets and debts obtained before or after marriage).
3. Understand Your Cash Flow
Even if you anticipate having a considerable net worth after divorce, it’s important to know what your cash flow will look like moving forward. You don’t necessarily need to budget and track every expense, but you do need a clear idea of how much money you’ll have coming in each month.
Write down your income, including your salary, alimony, child support, dividend income, and so on. Then write down all of your expenses. (Don’t forget one-off expenses like property taxes and private school tuition that may not show up on your monthly bank statements.)
Seeing these numbers in writing will help you get comfortable with your new cash flow and help you prepare for any unexpected expenses.
4. Plan Ahead for Post-Divorce Life
Life drastically changes after divorce. Instead of dividing financial tasks between the both of you, you become solely responsible. Now is a good time to start:
- Making a legal name change
- Updating all assets, documents, and liabilities
- Changing beneficiaries and emergency contact information
- Setting up a filing system to keep tax records, investment documents, insurance policies, and legal information organized
5. Don’t Be Too Hard on Yourself
No matter how amicable you try to make it, divorce is messy. It’s emotionally, physically, and financially draining.
Go easy on yourself. You may be in a fog right now—and that fog may last for quite some time. Seek therapy or counseling if you need to. Do whatever it takes to protect your mental and physical health.
6. Lean on Your Advisor
Having a support system is essential to successfully navigating life’s ups and downs, and this includes going through a divorce. As one of life’s biggest challenges, divorce is a time when you need that support more than ever. Part of your support system should include a trusted professional who can offer informed and objective financial advice. It’s wise to lean on your advisor during this time. They are there to offer advice, listen as you voice your fears and concerns, and help clarify any issues of concern or confusion.
If you don’t already have a financial advisor as a member of your support system, Acute WealthCare would be honored to join your team. Together, we’ll navigate your financial life. As your financial confidant, we work closely with you, listening to understand your specific needs and goals. We are dedicated to walking you through your options, organizing your finances, and helping you find the lasting security you deserve. Schedule a 15-minute introductory phone call to get started!
Scott Tschappat is a wealth advisor at Acute WealthCare, an independent, fee-based comprehensive financial services firm with over 20 years of experience. Scott is committed to helping his healthcare worker clients create a financial plan that brings them comfort and dignity. Scott learned the importance of proper financial management and making a plan for the unexpected at a young age when his father passed away suddenly and he watched his mother use the life insurance money wisely to take care of their needs, both present and future. He strives to steward his clients’ money well, as if it were his own mother’s, and help them every step on the journey to their financial future.
Scott lives in Highlands Ranch, CO, with his wife, Bridget, a school counselor at All Souls Catholic School, and their two daughters, Sarah and Emily. He loves sports and has been lucky enough to coach both of his daughters’ basketball teams. In the spring and summer, you can find Scott getting his hands dirty gardening and enjoying live music at Red Rocks or another local venue. To learn more about Scott, connect with him on LinkedIn. You can also register for his latest webinar on What We Do & How We Help.