Going through a divorce is hard enough without money problems making it worse. The choices you make now can affect your bank account for years to come. Here are five smart money moves to help you stay on track when your marriage ends.
Build Your Own Credit History
If your husband handled most of the bills, you might not have much credit in your name. This can cause big problems when you try to rent an apartment or buy a car.
Open a credit card or small loan in your name right away. Make your payments on time. This helps build your own credit score, which you’ll need after divorce. Also, get a copy of your credit report. Look for any accounts you forgot about or don’t recognize. If possible, ask your husband to share his credit report too. (Don’t get a copy of his credit report without his permission… that’s against the law.)
Handle Retirement Accounts Carefully
If you’re splitting retirement accounts like 401(k)s or pensions, you need more than just the divorce agreement. You usually need a special document called a QDRO (Qualified Domestic Relations Order). Without this document, you might face big tax penalties if you withdraw money early. Don’t skip this step!
Get Expert Help for Complex Assets
Some things are hard to put a price tag on. When your divorce involves things like business ownership, stock options, patents or other intellectual property, or homes with complicated ownership, you probably need to involve a professional. It can get expensive to involve appraisers or business valuation professionals, but this is the only way to make sure that your interests are protected.
Women often leave money on the table with these complex assets because they don’t know their REAL value. Don’t let this happen to you. Your lawyer’s guess on the value of these assets isn’t good enough. Your opinion or your husband’s opinion won’t be accurate. You need an expert like an accountant to give a proper value.
Know Your Divorce Options
Divorce attorneys play an important role in many cases, but you don’t necessarily need an expensive lawyer on retainer. Consider other options like:
- Mediation (working with a neutral person)
- Do-it-yourself divorce (for simple situations)
- Unbundled legal services (paying for just the help you need)
Take your time to choose what works for your situation and budget. Don’t take a shortcut just to save money, though. If you have concerns or some complicated aspects to your divorce, it is probably best to retain an attorney to make sure you’re protected.
Update Your Estate Plan
Once your divorce is final, update your will and trust, the beneficiaries on your life insurance policy, your retirement account beneficiaries, and your power of attorney documents. This ensures the right people will inherit your assets and make decisions for you if something happens.
The decisions you make during divorce will affect your finances for years. Taking time to plan carefully now will help you build a more secure future.
