Planning for a New Beginning
Your Path to Financial Independence After Divorce
Last updated 2/28/2019 at 7:14am
Major relationship transitions can be overwhelming, both personally and practically. Dealing with the impact of divorce on your financial life can make an emotionally difficult time even more challenging. Although divorce is seldom easy, you can prepare for it-and being prepared will help you feel more in control and better equipped to make informed, confident decisions about your financial future.
Assembling a Team of Trusted Advisors
Going through a divorce can be lonely, which is all the more reason to surround yourself with an experienced team of advisors who can provide critical guidance and caring support. To help you through the process, consider building a team that includes:
• An attorney who safeguards your best interests and can deal objectively with the many complex, often emotional, issues that may arise.
• An accountant who can advise you on changes to your tax status.
• A personal counselor, such as a therapist or a clergyperson, who can help you cope with private, personal issues you may not feel comfortable discussing with a legal or Financial Advisor.
• A Financial Advisor who focuses solely on you-and your needs and wishes-and who can help you create and implement strategies for helping you achieve your goals.
Understanding Who Gets What
Divorce involves not only an emotional separation, but also a financial one. Determining which assets you will own, and which will be owned by your former spouse, is part of the process. While the specifics vary from state to state, you should be aware of some important concepts:
• Marital property includes virtually all property you and your spouse acquired during the marriage. This includes real estate, investments, bank accounts, art collections and other physical property.
• Individual property includes property that was given to or inherited by you, acquired before marriage or acquired using property that was a gift, inheritance or already owned before marriage. It also includes any property that was excluded by a premarital or other agreement.
How marital property is divided depends on where you live. Most states rely on the concept of equitable distribution, where the goal is to achieve a division that is fair based on contribution of each spouse, length of the marriage, child custody needs and each spouse's financial needs, circumstances and prospects. Some states adopt a community property approach, where marital property is divided evenly between the spouses.
Taking Control of Your Financial Life
As you prepare for the next chapter of your journey, you will need to consider the following key aspects of your financial life:
• Your credit. Good credit translates into financial flexibility, so check your credit report and protect your credit rating by closing joint credit cards and other joint accounts.
• Your health and retirement. Make sure you understand your options for healthcare coverage and how much it will cost. You will also want to know whether you and your former spouse have a beneficiary interest in each other's retirement plans.
• Your estate. If you have a trust, find out what happens if your former spouse remarries. Don't forget to review your life insurance policy, if you have one, and consider designating a new beneficiary. It is also wise to review your estate planning documents-your will, healthcare directive, power of attorney and retirement accounts-and explore your options for changing fiduciary or beneficiary designations.
• Your children. You may need to prepare for child support, as well as the costs of tuition. extracurricular activities and healthcare.
Your change in circumstances is an opportunity to revisit and reset your priorities and start fresh. Regardless of how complex your situation may be, a Financial Advisor with experience coaching people through life transitions can help you identify your specific financial needs and goals, and then bring together the right resources to help you move forward in your new life with confidence.
Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor.
Susan S. Craig is a Financial Advisor in Tampa Office of Morgan Stanley Smith Barney LLC ("Morgan Stanley"). She can be reached by email at firstname.lastname@example.org or by telephone 813-227-2182.
Her website is: http://www.morganstanleyFA.com/Susan.Craig
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