The Gray Divorce Podcast: Episode 10 Key items in your Post-Divorce Checklist
Now you're divorced. You can relax. You can breathe easy. Dip your toes in the sand. OK, that's all good. But there's still work to do. Here are 17 items that need to be taken care of after your divorce to make sure your post-divorce checklist for financial planning is in order.
As a divorce financial advisor, I recommend clients and prospective clients consider all of these points below:
- Retain a good financial advisor. Hey, it doesn't have to be me. Lol. Just find someone to work with after divorce that you trust and has some experience with divorce financial planning.
- Retain the services of a tax preparer. Be aware of your tax filing status. if you were divorced by December 31st of the year in question you'll be filing as a single person for that year.
- Close joint credit cards and bank accounts. The sooner the better.
- Update your will and estate plan.
- Change your beneficiaries. More likely than not you don't want your ex getting your retirement plan if you die suddenly!
- Update your health insurance. Consider COBRA, your employers health insurance plan or new coverage.
- Update your auto insurance.
- Obtain life insurance if required by the divorce decree. If alimony or spousal support is involved you might want to make sure that the payer has life insurance. Even better if the beneficiary owns the policy.
- Update your contact information.
- Change passwords on all accounts. Even your social media and online dating accounts!
- Create a budget and evaluate cash flow as compared to budget. Hopefully, you've done this well before the divorce decree has been signed.
- Obtain a copy of your credit report. There are three credit reporting agencies and federal law allows you to access one report per year per agency.
- Consider a prenuptial agreement for the next relationship. I'm serious!
- Take care of your mental health. This is a key post-divorce item. Strongly consider hiring a therapist and/or a Certified Divorce Coach.
- Take care of your physical health. Embark on new healthy habits. You won't regret it!
- Seek new social connections. Gray divorce can be isolating. For men, particularly. Try to find a fun social group that mixes physical activity with social outings, like hiking or pickleball.
- Pursue your passions. Be creative. Find an outlet to explore your passions. Post-traumatic growth is a thing.
You have the opportunity now to create a new identity, to grow.
Get serious about reviewing your post-divorce checklist.
There is life after divorce. Go get it!
Announcement: Welcome to The Gray Divorce Podcast, hosted by divorce financial analyst and retirement planning counselor Andrew Hatherley. Join Andrew and guest experts as they help late-life divorcees build the financial and mental foundation for a meaningful future. There is life after divorce. Now on to the show.
Andrew Hatherley: Hey everyone, welcome to episode ten of the gray divorce podcast. Today, we'll be talking about the key steps that a recently divorced person needs to take once the divorce decree is signed. Now these steps may not apply to everybody but without a doubt most of them will.
Now I know from hard earned experience that once the divorce decree is signed many of you will simply want to find a beach or a swimming pool and lay on a floaty with a cocktail for a week or two.
Maybe that's not a bad idea. But once you get back from the beach there are some things to do.
Remember, for most people divorce is the largest financial transaction in their lives. And with any major financial transaction once the documents are signed there's still some work to do. So, without further ado, here's my list of the top 17 (yes 17 I love odd numbers) things to do after signing the divorce decree.
The first thing to do, and this may sound self-serving, but the first thing you need to do is find a good financial advisor, preferably someone experienced in the world of divorce. Someone like me, who has earned the designation certified divorce financial analyst. Chances are you may not want to continue working with the same financial advisor that you and your ex-spouse had together. That's understandable. and more likely than not he or she will not be familiar with all the steps that need to be taken after divorce.
Now obviously the role of the financial advisor is to help you build the financial foundation for your life going forward. And this will involve elements of financial planning: investment advice, understanding your particular needs, goals and risk tolerance, preparing for an income stream in retirement, taking taxes into consideration with respect to your retirement planning, all the things a good financial advisor will do.
All these things are very important but the immediate job of a good financial advisor helping you after your divorce is to make sure that you execute all the necessary transfers of accounts in accordance with the divorce decree. If you're getting half of your husband’s 401K then we’ll likely need to open up an IRA for you and ensure that that gets transferred in the appropriate way, without incurring any unnecessary taxes or penalties. If you're getting half of your wife's brokerage account we need to open up your own brokerage account and ensure that those funds or investments get transferred in a way that’s tax efficient.
Two, it's important that you retain the services of a tax preparer and review tax planning for the year of divorce. Remember your tax filing status is determined by your marital status on December 31st. So, if you're divorced on December 29th then you'll be filing as a single person for that year. If you were divorced on January 1st then you'll be filing as a married person for the previous year, either jointly or married filing separately. Be sure to review any tax withholding allowances and any required quarterly tax payments. Also, if you have children you'll want to speak to your tax person about how the tax benefits will be claimed relating to dependent children.
Three, close joint accounts and joint credit cards. If you and your spouse had joint bank accounts, credit cards or other financial accounts, it's important to close those and remove your ex-spouses name from them. This helps to avoid potential financial disputes or issues in the future. Believe me you don't want to go back and deal with your spouse over financial issues after you've gone through this divorce. So go ahead and open new credit card accounts in your individual name. You may have opened some new individual accounts during the divorce and that's ok.
Four, update your will and estate plan. After divorce, it's important to update your will and estate plan to reflect any changes in your assets and beneficiaries. This includes updating your power of attorney, healthcare proxy, physicians’ directives, and any other relevant documents. Failure to update these documents can result in unintended consequences, such as your ex-spouse inheriting your assets or making decisions on your behalf if you become incapacitated. You don't want that happening.
Five, along the similar lines, change your beneficiary designations! In addition to updating your will and estate plan you should also update the beneficiaries on any retirement accounts, life insurance policies, and other financial accounts. Failing to update your beneficiaries could result in your ex-spouse receiving these assets if you pass away, which more likely than not will not align with your wishes. Sometimes it does, but it doesn't usually.
Six, update your health insurance. If you were covered under your ex-spouse’s health insurance plan, you'll need to find new coverage. This may involve enrolling in a new plan through your employer, enrolling in cobra, purchasing an individual policy or applying for coverage through a government program.
Seven, update your automobile insurance. If you and your ex-spouse shared a car or were both listed on an auto insurance policy you'll need to update your auto insurance to reflect your new circumstances.
Eight, still on insurance here... obtain life insurance if it's required by the divorce decree. This is particularly important if one spouse is receiving alimony or spousal support. That person is going to want to make sure that if the payor dies, that the income from those future alimony payments will continue to be paid in the form of a lump sum life insurance settlement. It's good practice for the person receiving the payments to own the policy and to make sure that they're the beneficiary if their ex passes away. Life insurance also can play a key role if there are debts that remain in joint name for whatever reason let's say a mortgage, after the divorce. You're going to want to have some sort of insurance that if anything happens to your spouse then that mortgage can be paid off at least their portion of it.
Nine, change the passwords in all your accounts, social media too. Nothing more to add there.
Ten, update your contact information. Make sure to update your contact information with your bank, your credit card companies, insurance providers, retirement plan custodians, and any other relevant entities. This will help ensure that you receive important documents and notifications in a timely manner.
Eleven, create a budget. Now, hopefully this is something that you would have done during the divorce process in concert with your divorce financial advisor. Hopefully you'll have planned for what your income and expenses are likely to be following the divorce. Remember one household is being divided into 2 and you each have your own expenses now. It's a very, very rare case where a standard of living does anything but decline immediately following a divorce. So it's important to create a budget and stick to it and avoid overspending to ensure that you're able to cover your expenses and save for the future.
Twelve, obtain a copy of your credit report. After a divorce it's a good idea to obtain a copy of your credit report to ensure that there are no errors or inaccuracies that could impact your credit score. You should also monitor your credit report regularly to stay on top of any potential issues. I always recommend that my clients go to the website annualcreditreport.com. Federal law allows you to get a free copy of your credit report every 12 months from each credit reporting company. And those credit reporting companies are, if you didn't know, Experian, TransUnion, and Equifax.
Lucky # 13 Here's a fun one to consider, seriously consider, a pre-nuptial agreement for your next relationship. Now, for some of you emerging from divorce the thought of getting married again might turn your stomach but I know there are people out there remarrying while the ink hasn't dried on their divorce decree.
I fall into the former category. I never said I would never get married again, I just said that I would think long and hard about it and there was no way on God's green earth that it was happening without a prenuptial agreement.
For those of us who've gone through mid to late life divorce and have spent many years rebuilding it would just be foolish not to protect ourselves. That's my editorial comment for the day.
Let's consider some very important non-financial to-dos that should be on your post-divorce checklist.
First of all number fourteen. Protect your mental health. Going through divorce can be emotionally exhausting, so it's important to take time to heal and process your emotions. This may involve seeking support from a therapist, maybe also a Certified Divorce Coach, participating in a support group, or simply taking time to reflect and recharge.
Fifteen, you need to take care of your physical health in addition to your emotional well-being. This may involve exercising regularly, eating a healthy diet, and getting enough sleep. For people who don't like to go to the gym or may be somewhat averse to working out, try to take it one step at a time, try to build one or two good habits and then build on those. I always refer people to the great book Atomic habits by James Clear. He talks about habit stacking. This is a technique that I've used. essentially start with one habit. Let's say don't eat or drink alcohol after 6:00 o'clock in the evening. if you can keep that habit up you'll find that you start getting a much better night's sleep. And when you get a good night's sleep you feel more refreshed when you wake up. and when you feel more refreshed and you wake up you're more inclined to get some exercise. The mental and physical benefits of exercise have been well documented. Pretty soon the chances are good that you can get yourself onto a virtuous cycle as opposed to a vicious cycle. A virtuous cycle of a good night's sleep exercise healthy diet all of which are amazing contributors to a positive mindset, which can never be underestimated in terms of personal growth after divorce.
Sixteen, seek new social connections. Divorce can be isolating. In fact, research has shown that men suffer a greater “social penalty” in divorce than women. But whether male or female it's important to seek out new social connections to help you feel supported and connected. This may involve joining a club or organization, volunteering in your community or participating in a group activity or sport. I'm partial to group activities like hiking or pickleball, because this way you're getting the social connection in the context of a healthy physical activity. both are a plus.
Seventeen, pursue your passions after a divorce. It’s important to focus on yourself and pursue your passions. This may involve taking up a new hobby, travelling, or exploring new career opportunities.
Emerging from divorce can be a great opportunity to explore new avenues of creativity. In fact, I dove pretty deeply into this subject in the Gray Divorce Podcast Episode #4 where I spoke about growth after gray divorce. When I first began conducting divorce workshops in 2017, I made it a point to emphasize that there is life after divorce. It can be a better, richer, more rewarding life because we're given the opportunity to start again, to reexamine our lives and to reflect on the fact that we're emerging from a situation that wasn't right for us.
In episode four I spoke about the concept of post traumatic growth. You might want to Google post traumatic growth. The leading expert in the field is a psychologist by the name of Richard Tedeschi and he wrote that psychologists like him over the last 25 years have learned that negative experiences can spur positive change including a recognition of personal strength, the exploration of new possibilities, improved relationships and a greater appreciation for life and spiritual growth.
For now, I'll leave you with this thought:
Divorce is a difficult process but taking the time to address these important post-divorce checklist items can help ensure a smooth transition to your new life. There's a financial component, updating legal documents, financial accounts, making sure beneficiaries and trusts are updated and there's a personal or social component and there's a health component which is extremely important.
If you're emerging from gray divorce you've got the opportunity now to create a new identity, to grow, there's no turning back the clock to who you were as a husband or wife but there are any number of possibilities in your future and you have the power to write a great third act in your story.
If you'd like some help building the financial foundation for a meaningful and purposeful life after a divorce, please reach out via my website transcendretirement.net. As always, thank you for listening to The Gray Divorce Podcast. Until next time. Cheers.
Announcement: Thanks so much for tuning into this episode of The Gray Divorce Podcast. To learn more or get in contact with your host, you can visit Andrew's website at TranscendRetirement.net. Also, please feel free to rate, subscribe, and leave a review wherever you listen to your podcasts. That helps others find the show and we greatly appreciate it.
Thanks again for listening, and we'll catch you in the next episode.
Andrew Hatherley: Information provided is educational only and should not be construed as legal or tax advice. Each situation is unique and should be discussed with your tax or legal advisor prior to implementation. Andrew Hatherley is not an attorney and does not provide legal advice. Information provided is financial in nature.
Advisory services offered through Hatherly Capital Management LLC. Divorce Financial Analysis Services offered through Wiser Divorce Solutions and affiliated company.