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The Importance of Financial Planning When Getting Divorced

The Importance of Financial Planning When Getting Divorced

May 12, 2021

Divorce is like beginning a new chapter of a book, it’s part of your overall story.Turning the page means you’ll likely encounter unexpected twists and turns in the plot.

The end of a marriage is an emotional experience so it may be easy to overlook the importance of preparing for your new financial life. How will the settlement affect your financial plan and your lifestyle?

At One Financial Services,we’re here to help guide you through the important and time-sensitive issues you should consider during and after a divorce...

How does the divorce affect your estate plan?

Generally, estate planning documents remain in effect after a divorce but they no longer function the same way. Provisions of a will or living trust that benefit or give authority to a spouse are no longer valid upon divorce or even a legal separation.

Depending on your location a divorce is like a death where the estate plan documents are concerned.This means an ex-spouse named as a beneficiary to the assets upon your death will be overlooked, and the assets pass to the next beneficiary in line.

Your entire estate plan should be updated!

Start with guardian provisions for minor children in the event that both you and your ex-spouse pass away.If possible, agree upon who will be the children’s guardian.Should you both appoint different guardians the court will end up making the decision.

Who will be the executor or trustee? This is a position of great trust and responsibility,so choose someone who is unbiased...and qualified to handle your estate.

Are new beneficiary designations in place for retirement accounts and life insurance policies? In many states, divorce automatically negates an ex-spouse’s interest in a will for living trust but may not do the same with beneficiary designations. Should you pass away before updating your beneficiaries, your ex could receive and keep the money.

Other considerations taxes, gift taxes, income taxes, alimony with its related taxes and deductions, child support, and property transfers.

Life is complicated, divorce even more so. Our One Financial Services team is here to advise you through difficult times. Our team becomes part of your team; we are pleased to work in concert with your estate attorney and tax accountant to ensure a smooth transition to your life’s next chapter.

The opinions voiced in this material are for general information only and are not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.