Maintaining Financial Well-Being Through a Divorce

Before Filing for Divorce

Once Divorce Is Underway

After the Divorce Is Final

A Final Suggestion

Before Filing for Divorce

Compile Crucial Documents

While gathering this information can be challenging and time-consuming, evaluating your financial situation before committing to a divorce can make the process less daunting. Here are key documents to have on hand:

• A summary of personal and family assets, like property and investments
• Paperwork on personal and family liabilities, like mortgages, student and auto loans and business debts
• Tax and income information, such as paystubs and tax returns
• Any marital property agreements or prenuptial agreements
• Retirement benefit documents, like pension benefits
• Any financial plans or estate planning documents
• Credit card and bank statements
• Your employer benefit information

Document Account Information

During your marriage, it’s likely you opened financial accounts under one name and had credit cards that you both physically shared. Now that you’re going through a separation, it’s necessary to consider which accounts you will still need access to – and to ensure your name is on them.

If you own a joint account, or are an authorized user on an account with your partner’s name on it, that does not necessarily mean you’ll maintain the same access after a divorce. Compiling a list of details about these accounts, like the name of the firm, type of account and titling, can help you keep track of everything.

The same can be useful for ironing out the details of other shared accounts you may have, like subscriptions to streaming services, internet and cell providers, and even email accounts. Just remember to be cautious of what you document in your list – only include the name of the provider and who is billed each month, along with whether you need to change passwords or payment information for these online accounts.

Here are some questions to consider as you create your list:

• What service providers are you currently paying monthly or yearly fees to?
  • Take note of linked bank accounts and credit cards on autopay
  • Can some of these services be cancelled now to save money?
• What is the verification process on these accounts like?
  • Sometimes, usernames and passwords are not enough. With extra security measures like two-step authenticator apps and additional security questions, you’ll want to know if these are a part of the verification process – especially if you are using a device that is not recognizable to the account
• What personal information like passwords and credentials might you have shared with your partner that you may need to change now?
  • Consider generating new passwords for these accounts or replacing with a new account

Once Divorce Is Underway

Update Your Account Information  

During a divorce, both parties involved may not be willing to work together on dividing up assets and accounts. If you have a prenuptial or postnuptial agreement, splitting your accounts should be fairly straightforward. If you don’t, consider closing or freezing those accounts – but only after consulting your attorney, who can guide you on the right timing to avoid any problems down the road.

After the Divorce Is Final

Divorce may render your previously well-laid plans obsolete, so it’s time to make some updates to ensure they reflect your post-divorce goals. A great place to start is by revising beneficiary, power of attorney and other designations as appropriate before revisiting the details of your will, estate and retirement plans.

Split Your Shared Accounts

As you divide your accounts in accordance with your divorce agreement, it’s important to connect with your Baird Financial Advisor, who can help mitigate withdrawal fees and minimize tax implications. Following the account closures, you’ll need to consider what entities need to be notified of new bank accounts, credit cards, titles and insurance.

Revisit Your Plans

Your Baird Financial Advisor will be a key resource in helping you map out your new plan and future. Following your divorce, there are key topics to discuss with your advisor:

• How your cash flow has changed and its implications on your budget
• How your short-term and long-term goals may have changed
• What your new tax filing status is and potential tax strategies
• What adjustments have been made to your retirement plan, saving and investing strategies
• If your marriage lasted 10 years or more, whether you’d like to apply for half of your ex-spouse’s Social Security benefit (if it’s larger than your own)
• What your ideas are for family planning, including an evaluation any expenses for children

Remember that your new marital status changes the income you report on federal documents like financial aid forms. If you have children from your marriage and are currently saving or paying for their education, you will want to revisit those account details and review the filing requirements for your new marital status.

One Final Suggestion: Explore Your Options

Divorce can be a cumbersome process, even for amicable separations. Before you officially begin the journey, consider if alternatives like physical separation, annulment or mediation could be effective in your situation. While these methods all come with their own financial considerations, they can be less expensive than a full divorce proceeding with attorneys.

Also, consider adjusting your budget now to set yourself up to be able to absorb the cost of divorce. You can begin doing this by analyzing your personal income and deciding what you can afford going forward. Along with this, don’t forget to consider any changes to your living arrangements before the divorce. And finally, ensure you have a strong support system that can be there for you through this process.