Financial Freedom Starts NOW
1. Change Your Beneficiaries
In a marriage, usually spouses name each other as beneficiaries. As long as the divorce decree doesn’t require that an ex-spouse remain the named beneficiary, you will likely want to change this. Remember to change it not just on life insurance, but on 401K polcies and IRA’s. There can be lots of legalities to consider. So be sure to understand the difference between simply naming a custodian, establishing a trust or naming your estate as a beneficiary.
2. Update Your Insurance
Cars, houses, personal belongings: You need to confirm your insurance coverage on all of these items. Don’t neglect your healthcare coverage either. If you were covered under your spouse’s plan, you will need to look into other options through your employer or an insurance provider. Continued coverage through COBRA (Consolidated Omnibus Budget Reconciliation Act) may be an option, but remember that it expires after 36 months and costs the entire amount of the premium. You don’t want to wait too long, because there are time frames based on qualifying events by which you will need to notify employers and request coverage changes.
3. Settle College Expenses for Kids
If you have children, you need to determine which party will be taking ownership of their college savings. 529 Plans only have one owner, with one successor owner. Do you want your ex-spouse as the successor owner of the account? Each parent may want to have his/her own account so you don’t have to mix money. If you have any questions, make sure to speak to a financial adviser.
4. Understand Property
What’s mine is mine, and what’s yours is yours. Right? No. Not if you are married. Unless you have a prenuptial agreement, assets acquired during a marriage are communal. Now, depending on the state in which you live, the date of separation may factor into what accounts as separate property. Take inventory of your stuff. Pictures, videos, lists. Whatever helps you. Talk to your attorney. Talk to a loan officer about your mortgage options regarding your marital residence, refinancing and removing a party from the quit claim deed. For a free online secure mortgage review, click here.
5. Maintain & Build Bank Accounts/Credit
Divorce your old accounts. Start a new budget, and stick to it. If you don’t already have a bank account in your own name, open one. Preferably, you will want to open an account at a bank that you didn’t use during your marriage. If you have joint credit cards, cancel them or refinance them into one party’s name. Credit is one of the biggest pitfalls in a divorce. It is very important for you and your financial future for you to strive to build and maintain a strong credit profile.
You are on your way to financial freedom!
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