Life can get quite complicated as you move from one household to two. And it is one of the primary reasons why the ending of a marriage takes such a toll. Here are some things to consider during the process of ending your marriage to protect yourself financially.
Update your beneficiaries
This is an area where it’s important to stick to the details. If your marriage termination is already final, your ex may still appear as your beneficiary in many places. If you no longer wish to have your former spouse be your beneficiary, then don’t forget to look at insurance policies, employee benefit packages and retirement accounts. And of course don’t overlook any documents that you have signed related to end of life. You may want to review the changes with your attorney to ensure that all the actions you’re taking still maintain the terms of the final property settlement agreement.
Don’t try to cook the books
Faking or misrepresenting your income and earnings is likely to complicate the process of ending the marriage, and will often end up costing you money. The most costly battles are often related to disputes over financial records and income. And if you get caught misrepresenting or lying about your income, you may be forced to not only pay your lawyer fees, but your spouse’s as well. Remember, your spouse has the right to review your financial records.
Make changes to your W-4
Once your marriage ends and you become single, it is quite possible that you are going to face higher taxes. It’s important to understand the situation sooner, rather than later when you owe taxes. You may want to consider increasing your withholding or estimated tax payments.
Joint accounts should be canceled
It’s important that both you and your spouse remove the other person’s “authorized account” status on accounts that are jointly owned. Consider seeking out your own individual credit as soon as it makes sense. You want to make it very clear what debt was incurred during the marriage and make sure that your spouse no longer can influence your credit rating. Make sure that you have all the information about your credit card accounts, bank accounts and other financial accounts. And definitely monitor your accounts for large withdrawals.
Create a realistic budget for yourself
Your expenses are going to increase as you shift from a single household to two households. You may not be able to maintain your current spending habits. You’ll want to set up a budget that covers your ongoing costs, creates a cash cushion and hopefully some long-term savings.
Review your credit report
It’s a must to check your credit report. Sometimes one spouse has set up credit accounts without the other spouse’s knowledge or permission.
I hope these tips have been helpful. If you are considering ending your marriage and have additional questions about the financial impact of doing so, please contact John Heilbrun at 513-321-3940.