During a Divorce

torn divorce decree and cash, with broken wedding ringIf you are considering or are in the throes of divorce, please heed the advice provided in this article.  Reach out to local Certified Divorce Financial Analyst CDFA™ Donna S. Cates with Ameriprise Financial at 205.909.3126 or donna.s.cates@ampf.com

07/11/2011  |  Suzanna de Baca

Summer is wedding season and couples everywhere are entering marriage with optimism, confidence and newly mingled finances. Many will live happily ever after, but some will later decide to go their separate ways. While a divorce can be emotionally devastating, it doesn’t have to derail your financial security. Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, suggests five tips for people facing this life changing event.

1. Do your homework. It’s critical to assess how your divorce will impact both your short and long-term financial goals. Take time to account for any household items that you’ll need to replace and evaluate how this will affect your immediate cash flow. Understand your total net worth (assets and liabilities), and other significant financial obligations including mortgage or rent payments, retirement plan contributions, child support and alimony payments. If you have young children, project future expenses including car insurance, tuition and other large purchases which often accompany the teenage years, as well as more immediate needs such as daycare.

2. Understand your assets. Not all assets are created equal. Instead of allowing emotions to drive your decisions, carefully evaluate the financial benefits and consequences of different assets before you negotiate your settlement. It’s tempting to ask for the house, but your residence, while valuable, is an asset that requires mortgage payments and a considerable amount of upkeep. Instead, consider requesting a portion of your spouse’s retirement plan – a tax-deferred and potentially appreciating asset.

3. Update your financial accounts. Immediately revise the beneficiaries on your checking and savings accounts, investments, retirement plans and life insurance policies and update your will. Update all property deeds and car titles – the names of former owners are not automatically removed following a divorce. You may also want to cancel credit cards or ensure your spouse is no longer an authorized user on your accounts. Also confirm that you have been removed as a co-owner on your former spouse’s accounts so you aren’t held liable if they fail to meet an obligation.

4. Review your insurance coverage. Your insurance needs may change once you’re single. Evaluate your life, health, disability, auto and property insurance policies and confirm that you have adequate coverage for yourself and any dependants. Ask the court to require your former spouse to maintain life and disability insurance to protect any child support or alimony that is owed to you, in the event that they die prematurely or are no longer able to work.

5. Seek expert financial advice.
Your attorney will play an essential role in your divorce proceedings, but don’t assume your lawyer is a financial expert. Consider working with a financial advisor who can help you with all aspects of your financial life before and after your divorce is finalized. This may include determining fair separation of assets, evaluating cash flow and liabilities, recommending budgets, examining your protection needs and identifying favorable tax strategies.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.


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