If you're considering divorce, you probably already know there are a lot of financial decisions to be made. You may need to decide whether one spouse will continue to live in the family home, or whether you should try to sell it. Especially in a high-asset divorce, you probably have a web of personal and marital assets such as retirement plans, insurance, separate and/or joint checking and savings accounts, vacation properties, and other property. You may have shared debts to figure out.
While the divorce process itself includes procedures for marital property division, it won't take care of all the financial and property decisions you need to make after a break-up. You should review your overall financial plan to make sure you have enough and the right types of insurance, investments and savings.
A financial planner can help you plan to live within your new budget, help with tax issues and make sure you have the right insurance and retirement plans in place.
You will also need to change your will and estate plan, along with the beneficiaries to your retirement plan, life insurance policy, annuities and the like.
"I advise people with any type of life change -- a wedding, death or divorce -- to pull your will out and look at it," said West Virginia estate planning lawyer Michelle Bechtel in a recent interview with The State Journal.
Georgia Law Does Not Automatically Revoke Your Ex-Spouse as a Beneficiary
Twenty states have adopted statutes that automatically revoke a former spouse and his or her relatives as beneficiaries to life insurance policies. Georgia is not one of them.
You should also know that, unless your divorce decree is drawn up very specifically to do so, it won't trump a beneficiary designation listing your ex-spouse.
The best thing to do is to take stock of your estate and financial plans and make the effort to update your beneficiary designations. It usually takes less than five minutes to do so, especially if you have Internet access to your accounts.
Even if you intend for your ex to remain the beneficiary, its best to update your beneficiary designation so it reflects that you are divorced. That will make it clear that you intended your ex to continue to be your beneficiary.
Review Your Financial Plan After Your Divorce
In addition to making those changes to your beneficiary designations, after a divorce, estate and financial planners recommend you take a look at several items that will affect your financial life:
- Life insurance. You may need more life insurance if your financial responsibility for your children has increased. If your budget relies on alimony or child support, consider purchasing additional life insurance on your ex-spouse.
- Short- and long-term disability insurance. Check if you have enough to keep you out of trouble if you can't work due to a disability.
- Long-term care insurance. The best time to buy insurance to cover in-home care, assisted living or nursing home care is when you're healthy and qualify for reasonable rates.
- Powers of attorney and living wills. Be sure to update your durable power of attorney for finances, medical power of attorney or healthcare proxy and other such documents.
"Frankly, these are simple things, but I think people's emotions get tied up, and they overlook them," says Charleston certified financial planner Jeremy Lowe.
"Many Financial Hurdles Remain After a Marriage Ends" (The State Journal, August 12, 2010)