Financial Blunders to Avoid in Divorce – Part II
Last week we looked at some financial mistakes that you should really avoid when facing divorce. This list was getting long, so we broke it into two parts. Here is part II of some really common, but avoidable errors.
1. Understanding Joint Debt
A divorce decree is lawfully binding between you and your ex-spouse. It’s meaningless to your creditors. They do not care that your ex was supposed to pay the Visa bill or the small business loan. If it is at all possible, pay these debts off during the divorce process with marital assets. If not, make sure they are retitled and out of your name via negotiations in order to protect yourself.
2. Social Security Benefits
If you were married for more than 10 years, you could be entitled to your ex-spouses benefits at your retirement. This is federal law – not part of divorce negotiation. It can really be crucial in situations where one parent was stay at home during the marriage and just getting back into the workforce to bridge the years between divorce and retirement. The benefit through your spouse may be more than the benefit through your own contributions. Ask for social security statements during the divorce negotiations to determine which benefit is best. This way you will know what kind of income you could have during your retirement from your ex-spouse. Social statements can be found at www.ssa.gov. Contact a financial professional for details regarding your situation.
3. Follow Up Work
Once the divorce is final, breathe. You’ve come a long way. Now, make sure all follow up is completed promptly regarding any transfer of funds, retitling of any assets, and especially beneficiary designations. You will need to change the beneficiary of your life insurance, your employee benefits, your 401k and any other accounts with a named beneficiary. A financial professional can help you walk through this and what accounts will need to be changed.
Wherever you are in the process, consider consulting with a Financial professional. These seemingly small blunders can lead to big mistakes and someone like a Certified Divorce Financial Analysts® will be just the person to help you avoid them.