Just when you thought it was over, you suddenly realize there’s still a lot of loose ends to tie up. Any time you have a major life event, you should review all of your legal documents and financial accounts to determine what changes are needed. After your divorce is final, a variety of updates are necessary to protect yourself and carry out the terms of your divorce agreement.
Unfortunately, it’s not a fun process. Going through more paperwork is probably the last thing you want to do. That’s normal, especially after having just completed the onerous process of your divorce. However, if you don’t make the necessary revisions, it can result in costly, unintended consequences for you and your family.
Things to do When Your Divorce Is Final…
Read Through Your Divorce Agreement
After your divorce is final, there are two types of changes that need to be considered; those you are legally required to make, and those you choose to make for your own benefit. Your divorce agreement outlines all of the terms of your divorce and will be needed to make certain changes. Make a list of the action items required along with their due dates. That way, you can prioritize what you need to do and when. Some items have fixed deadlines that you can’t miss and should be noted in your calendar.
For example, it is important to review the beneficiary on your life insurance policy. In most cases, people have listed their spouse as beneficiary. Unless you are legally required to maintain your ex-spouse as a beneficiary, you’ll want to change that immediately. Failure to change this designation can result in your ex-spouse getting a windfall if you die. At the very least, you have ensured a legal battle with your Estate to prevent them from doing so.
If you are paying child support, it is likely you will be required to name your ex-spouse as beneficiary to cover your child support obligation. Therefore, you need to review the death benefits of your policy carefully to make sure you are in compliance with the terms of your divorce.
Further, if your children are very young, you may not want to list them as outright beneficiaries so they inherit large sums of money. A Trust for their benefit may be a better option. An attorney that specializes in Trusts and Estates will be able to guide you in this area.
Separate Bank And Investment Accounts
Transfer joint or sole assets as identified in your divorce agreement (real estate, auto, bank accounts, bonds, investment accounts). Complete these transfers immediately after your divorce is finalized. If you delay, you will create more work for yourself since your balances are likely to change. As a result, determining the actual amounts to split will be more difficult.
Don’t forget to also review and distribute any contents you may have in a safe deposit box or other valuable physical assets such as jewelry, etc.
Transfer Funds To/From Retirement Accounts
This does not happen automatically. Someone needs to confirm that a Qualified Domestic Relation Order (QDRO) – needed to transfer a retirement account – is properly administered. Typically, the QDRO requires approval by the court and is forwarded to the Retirement Plan Administrator for processing.
Follow up with your divorce attorney to confirm that this is being handled. Typically, this is a separate matter that you will need to retain your attorney for. Make this a priority and be sure it’s completed.
Update The Titles On Your Vehicles
Complete any needed changes in the ownership titles for your cars, trucks, boats, and motorcycles. Your local Department of Motor Vehicles or state agency will have the forms needed. You should also have your insurance policies for these vehicles updated to reflect changes in coverage to remove your ex-spouse.
Refinance The Mortgage On The Marital Home
As long as your ex-spouse’s name is on the deed, they are technically a part owner regardless of what your divorce agreement says. This means that any lien or judgment that is filed against them can attach to the house. If you have been awarded the house in the divorce, make sure the deed is transferred into your name immediately.
If your ex-spouse has been awarded the house, make sure your name is promptly removed from any existing mortgage to avoid having your credit affected by late payments. Even if your ex-spouse makes payments in a timely fashion, having an outstanding mortgage in your name will impede your ability to get a mortgage for another home in the future.
Refinancing provides an excellent opportunity to save money and reduce your monthly expenses. Check with a mortgage lender as soon as practical to find out what you need to do to qualify for a loan.
Prepare Your Living Will, Healthcare Proxy, and Power of Attorney
You will want to prepare these as soon as you can. What was once legal and binding during your marriage may be null and void after your divorce. Unless you want your ex involved in making critical decisions on your behalf if you become seriously ill or even die, get these documents in order right away.
It is likely that you now wish your children to inherit your money as opposed to your ex-spouse. Give careful consideration to setting up a trust in your will so that your children will not inherit money before they are old enough to make financial decisions.
Update Your Beneficiary Designations
There are several important financial instruments where this comes into play. It is important to confirm that all of your bank and investment accounts, life insurance, disability insurance, 401(k), and pension has the proper beneficiaries designated. Do yourself a favor and update them right away before you forget!
Enroll In A Health Insurance Plan
If you have been on your ex-spouse’s health insurance, make sure to get your own health insurance as soon as possible. There are strict deadlines for when you can obtain your own health insurance policy after divorce. The same is true if you want to get COBRA coverage through your spouse’s health insurance policy. If you happen to miss the deadline, you could go for months without any coverage. So, avoid a lapse in coverage and don’t delay!
If your ex-spouse has been on your policy, make sure you notify your insurance carrier of your change in marital status, and have them removed upon the finalization of your divorce. Read your divorce agreement carefully to determine your legal obligations and abide by them. If you improperly remove your ex-spouse too soon, you could find yourself responsible for any medical costs they incur.
Update Your Insurance Policies
Review and change any homeowner, auto and umbrella liability policies as may be necessary. It’s also a good time to review each policy to determine if your deductibles and other coverage details are accurate and appropriate. These changes could also save you money.
Get New Bank Accounts
If you’ve got an existing joint bank account with your former spouse, close that account and open a new one for yourself. Also, if you have any type of joint family investment accounts, make sure that once the assets are divided, your ex no longer has access to those accounts. It’s time to start building your own financial presence and improving your own credit. Most divorce agreements will set forth how each account is to be divided. Follow the terms carefully and call your attorney with any questions.
Apply For Your Own Credit Card
If you don’t already have a good credit rating established with ample credit history, you should start right away. Getting a credit card in your name and making timely payments on balances due, can go a long way to building solid credit for you. Good credit is essential as you start your new life.
Close All Joint Credit Card Accounts
In addition to closing joint accounts, remove your ex as an authorized user from your credit cards. That way, they are no longer able to charge anything on your credit cards. Run a credit report for yourself to determine if you are listed as an authorized user on one of your ex-spouse’s credit card accounts. If so, ask them to have your name removed so your credit is not negatively affected if your ex fails to make payments on time.
Create A Budget For Yourself
With less income, it’s likely you will need to quickly figure out ways to save money and spend less. Creating a budget for yourself is an essential first step to getting your finances under control and it’s easier than you think. Check here for the ultimate guide to creating a budget to help you get started now.
Consult With A Financial Advisor
Contact a financial advisor to help plan your retirement and review your investments considering your new situation. If starting an education plan for your children was part of your agreement, you will need to establish one and begin contributing.
Update Your Employer
Contact your HR department as necessary to change beneficiaries of death benefits, retirement benefits and/or health benefits. Let them know if your direct deposit account has changed as well. In addition, review your tax claim information to see if you should modify it since divorce can change your filing status.
To avoid withholding too much (or too little) from your paychecks, ask your accountant for guidance. Depending on your situation, you may be able to immediately increase the amount of your take home pay.
Contact your child’s school notifying them of your agreed upon custodial arrangement. If you share joint custody, add a second contact and address for all school announcements and report cards. That way you will be up to date with all important information. Additionally, neither you nor your ex will need to keep the other informed. The same goes for doctors and dentists.
Furthermore, you will find it beneficial to speak with your children’s teachers to make them aware of your situation. This can be a trying time for your kids. Maintaining an open line of communication with their teachers will keep you informed of difficulties they are having in school.
Change Your Passwords To All Online Accounts
Does your ex know your old logins and passwords? If not, they can probably guess them anyway. Play it safe and maintain your privacy by changing all of your online passwords. You should also update any other online accounts you might have shared such as Amazon, Netflix, iTunes, etc.
Change Your Name
If you are changing your name, there are several organizations to contact and inform them. Start by contacting your motor vehicle department, and the Social Security Administration. If you are attempting to change your name, you may need a Certified copy of your Judgment of Divorce. Your divorce attorney can give you advice on how to obtain one.
Here’s a link to the Social Security Administration’s website to get a new social security card.
Get A New Email Address
You’ll want to begin creating a new online identity for yourself. If your email has your old name or you shared it with other family members, get a new email account. I’ve met many couples that shared the same email account which will no longer work for obvious reasons.
Contact Your Utility Companies
Update the account holder information and get your name on (or off) as appropriate. Be sure to consider the following companies: phone, electric, gas, alarm, cable, internet, and EZ-Pass.
As you have seen, there are many important things to do when your divorce is final. A little planning now can prevent a plethora of unintended financial and legal consequences later. Starting your new life off by strict compliance with the terms of your divorce agreement will avoid unnecessary legal fees. It will also ensure that you separate yourself from the past. The sooner you close the door on your old financial life, the faster you will be on your way to building a new and better life for yourself.