Finalizing a divorce can bring a complicated mix of emotions. You may feel relieved that the process is finally over, while also feeling uncertain about what comes next.
Once your divorce is finalized, several financial and administrative tasks deserve your attention. Bank and investment accounts may need to be updated, beneficiaries reviewed, insurance coverage changed, and a new household budget created. You may also be adjusting to a different income, new expenses, and a new financial reality.
The good news? You don’t have to figure everything out at once.
The first 90 days after divorce are an opportunity to get organized, understand your new financial picture, and begin building a plan.
Use this checklist as a starting point.
Review Your Divorce Agreement
Start by reviewing your final divorce agreement and any related court orders. Make a list of the financial responsibilities, deadlines, and transfers that still need to be completed.
Pay particular attention to:
- Property transfers
- Retirement account divisions
- QDRO requirements (Qualified Domestic Relations Orders used to divide certain retirement plans)
- Debt responsibilities
- Child support or alimony obligations
- Real estate transfers or sales
- Life insurance requirements
- Tax-related responsibilities
Keep copies of your final divorce documents somewhere secure. You may need them when working with your attorney, financial advisor, tax professional, or financial institutions.
If you are unsure about what a specific provision means or what action you need to take, speak with your attorney or another qualified professional before moving forward.
Create a New Post-Divorce Budget
Your household finances may look very different after divorce. Expenses that were once shared may now be yours alone, and your income may have changed.
Now is the time to create a budget based on your new financial reality.
Start by looking at:
- Monthly income
- Housing costs
- Utilities
- Transportation
- Insurance
- Food and household expenses
- Child-related expenses
- Debt payments
- Healthcare costs
- Savings and retirement contributions
- Discretionary spending
It may help to divide expenses into three categories: needs, wants, and financial priorities.
Don’t worry about creating a perfect budget on the first try. Your initial goal is simply to understand how much money is coming in, where it is going, and whether any adjustments are needed.
Build an Emergency Fund
An emergency fund can provide an important financial safety net as you adjust to life after divorce.
Unexpected expenses happen—car repairs, home maintenance, medical bills, or other costs can quickly disrupt your budget.
If possible, begin building savings specifically for emergencies. Over time, you may want to work toward having several months of essential living expenses set aside.
If you received money or assets as part of your divorce settlement, avoid making major spending or investment decisions before determining how much cash you may need for short-term expenses and emergencies.
Update Your Financial Accounts
Don’t assume your financial accounts automatically change when your divorce is finalized.
Review your:
- Bank accounts
- Investment accounts
- Retirement accounts
- Credit cards
- Mortgage and other debts
- College savings accounts
- Trusts and other financial accounts
Depending on your divorce agreement, some accounts may need to be divided, transferred, retitled, or closed.
Contact each financial institution to find out what paperwork or documentation is required, and keep records of the changes you make.
Review Your Beneficiaries
Beneficiary designations are easy to overlook after divorce—but they can have a significant impact on your financial future.
Review the beneficiaries listed on:
- 401(k) and 403(b) plans
- IRAs
- Life insurance policies
- Annuities
- Investment accounts
- Bank accounts with beneficiary designations
Don’t assume your beneficiaries were automatically changed when your divorce was finalized.
Your divorce agreement or applicable laws may affect which beneficiary changes can or should be made, so coordinate with your attorney and financial professionals as needed.
Review Your Insurance Coverage
Divorce can change your insurance needs as well.
Review your:
- Health insurance
- Life insurance
- Disability insurance
- Homeowners or renters’ insurance
- Auto insurance
- Long-term care insurance, when appropriate
If you were previously covered under your former spouse’s employer-sponsored health insurance, make sure you understand your new coverage and any applicable deadlines.
Life insurance may also be particularly important if you have children or ongoing support obligations. Your divorce agreement may include specific requirements regarding coverage and beneficiaries.
Take a Fresh Look at Retirement
Retirement planning may not be the first thing on your mind after divorce—but it is an important part of rebuilding your financial future.
Divorce can change how much you have saved for retirement, the income you expect to receive, and when you may realistically be able to retire.
Review:
- Retirement account balances
- Employer retirement plans
- IRAs
- Pension benefits
- Contributions
- Investment strategy
- Expected Social Security benefits
- Your long-term retirement income needs
If retirement accounts were divided during your divorce, confirm that the transfers have been completed properly and understand how those assets fit into your overall financial plan.
Understand Your Tax Situation
Your tax situation may change after divorce.
Depending on your circumstances, factors such as your filing status, dependents, support arrangements, property transfers, investment accounts, retirement distributions, and the sale of a home may have tax implications.
Before making a major financial decision, consider discussing the potential tax consequences with a qualified tax professional.
Understanding the tax impact before making a decision can help you avoid surprises later.
Update Your Estate Plan
Your estate plan should reflect your new circumstances.
Consider reviewing:
- Your will
- Trusts
- Power of attorney
- Healthcare proxy or healthcare directive
- Guardianship designations
- Beneficiary designations
- Executor or personal representative designations
If your former spouse was named in any of these documents, talk with your estate-planning attorney about what changes may be appropriate.
If you have children, this is also a good time to make sure your estate plan reflects your wishes for their care and financial future.
Pause Before Making Major Financial Decisions
After divorce, you may be ready for a fresh start. You might be considering buying a new home, purchasing a new car, investing a settlement, or making another significant financial change.
Before making a major commitment, take a step back and ask:
- Can I comfortably afford this based on my new income and expenses?
- How will this decision affect my long-term financial goals?
- Have I given myself enough time to understand my new financial situation?
Starting over can be exciting, but there is value in giving yourself time to make thoughtful financial decisions.
Your First 90 Days Are About Building Your Foundation
You don’t have to accomplish everything in the first week—or even the first month.
Start with the basics. Understand your new income and expenses. Organize your accounts and important documents. Review your insurance and beneficiaries. Make sure the financial terms of your divorce agreement are being completed. Then begin thinking about your longer-term goals.
Most importantly, remember that your divorce settlement is not the same thing as a financial plan.
Your settlement addresses how assets, debts, income, and other financial matters are divided or handled as part of the divorce. A financial plan looks forward. It helps you understand how those decisions may affect your ability to live comfortably, meet your goals, save for retirement, and build financial security in the years ahead.
Moving Forward with Confidence
The end of your divorce is not the end of your financial story. It is the beginning of a new chapter.
You may not have every answer today, and that’s okay. The goal is to take one step at a time and make financial decisions based on where you are now and where you want to go.
At Divorce Resolutions of New England, we help individuals navigate the financial side of divorce and understand how today’s decisions can affect tomorrow’s financial future. Whether you are preparing for divorce, currently going through the process, or adjusting to life after your divorce is finalized, having a clear financial plan can help you move forward with greater confidence.
If you’re ready to take the next step toward understanding your financial future, we invite you to schedule a complimentary consultation with Divorce Resolutions of New England.
