When separating from your spouse there are often headline issues like sorting out the custody of the children, ongoing support payments, and splitting assets which take priority over other items.
We have created a list of six key areas that might not seem important at the time of the divorce but can have lasting impacts on your financial health.
1. cash flow & budgeting
You may receive or pay ongoing support, but you will also need operating capital to pay big bills during the divorce process, and all legal and related fees.
Be sure you have timely access to the liquidity you need and ask your attorneys to have it in writing. Post settlement, it pays to create a budget that can map out your updated needs.
You will need to ensure that you have adequately covered any debts and shortfalls in needs. You should also consider life, total and permanent disability (TPD), and income protection insurance to protect support payments and be sure the beneficiaries of those policies are correctly handled.
Divorce can be financially crippling and can affect your nest egg for retirement. Superannuation is often a forgotten asset when it comes to settlement as it is not front of mind.
You should pay attention to your superannuation and particularly your contributions going forward as you may need to adjust to a change in income.
4. unpredictable and uneven settlement
The primary difficulty faced by individuals going through a major financial settlement is that whatever type of settlement they may be facing, their financial well-being will immediately change based on the settlement.
Change is often incredibly overwhelming, and it can pay to have an experienced financial planner in your corner which can help you navigate this period of considerable change.
5. tax affairs
The divorce process can drag on for months, even years, and then suddenly it all hits you at once. You should consider getting a financial planner and accountant involved at the earliest possible opportunity to review the tax ramifications of any property split.
Almost every asset that forms part of the settlement will have a tax consequence. Those consequences need to be equal and fair.
6. a new estate plan
Begin working with an estate planning professional shortly after you start working on your divorce, so that you have an estate plan ready to go.
This can include a new executor, new powers of attorney, and a new will. You probably will not be able to move most assets into your new estate until your divorce is final, and you may not be allowed to rename beneficiaries until then.
However, it pays to ready to execute changes as soon as practical.
Going through the divorce process is a long journey and paying attention to each step will help you reach your destination in the best possible financial shape.
How can RSM help?
Holding onto the vision you have of your new future as you collaborate with your team, including an experienced professional from RSM Financial Services can make all the difference. To get in touch, please contact your local RSM office today.