Split Decisions, our weekly divorce radio hour, covers financial lifestyle changes on the August 3rd live show. The attorneys at FORESTER PURCELL STOWELL PC have some tips and advice for minimizing the financial impact.

 

How can I minimize post-divorce financial challenges?

 

Kristin-Capritto-Attorney-ThumbnailKRISTIN CAPRITTO

Divorce is scary; you’ve literally got to reconfigure your entire life — emotionally, spiritually, logistically, and financially. While money is typically an ever-present stress, once you’ve lost a primary or secondary income as the result of the end of your marriage, money-stress becomes compounded exponentially. Things that were once your norm become a luxury. And attorneys’ fees, court costs, and counseling can quickly drain what extra funds you might have had to keep living your pre-divorce normal. Explaining this to kids can be even more difficult (no summer trip to Disneyland or art camp can be cataclysmic for your little one(s) trying to cope with mom and dad not being together anymore). It’s important to plan ahead, keep a cash account with some emergency funds, and plan for what comes after you’re finally and officially single again, as sometimes this means you’ve been assigned a portion of the marital debt. Once you are divorced and have a grip on your new financial normalspeak to an estate planner to ensure you’ve properly removed your former spouse as a beneficiary of your retirement accounts and life insurance policies (if you aren’t precluded from doing so by the divorce judgement), and to adequately plan for the passing of your assets to your loved ones if something should happen to you.

 

neil-foresterNEIL FORESTER

Minimizing the monetary damage that divorce can inflict requires only one thing – planning. Planning for what post-divorce life holds must start immediately upon the divorce getting under way. Whether you are the spouse who will be receiving support, or the spouse paying it, you must come to grips quickly with what life on your own means in terms of budgeting and cash flow. Do you need to find a better job (or any job, for that matter)? Do you need to downsize your home, either by selling the family residence, moving to a smaller apartment, or even refinancing to lower your payment? Must the kids stay in private school? These are all realities that divorcing people must face. And in complicated cases involving attorneys, those questions become even more critical. So consult with a financial planner, and before your divorce is done, meet with an estate planning attorney. You’ve got the rest of your life to live – so start planning for that now.

 

MICHELLE STOWELLmichelle-stowell

The best way to minimize the financial devastation that can be brought about by divorce is to spend responsibly. You may want to pay off the balances of credit cards and encourage your soon-to-be-ex to do the same. If at all possible, you should have a bit of a nest egg for the unexpected – the broken down car, the emergency vet bill and/or the dreaded attorney’s fees and costs. Minimizing the spending on necessities and extras is the way to go whenever possible. Once the property and accounts have been divided, you can decide on where to blow any leftover cash. While you are going through a divorce, however, the word of the moment is Save, Save, and Save.

 

Jenny Bain 220 x 220 Website 386JENNY BAIN

Utilize technology.  There are so many apps or websites that provide comprehensive, visual financial planning. When you’re just starting to reconfigure your life, the last thing you need is to feel overwhelmed by complicated financial decisions. Start small. Start laying out your monthly budget or proposed needs and let intuitive applications, like Mint by Intuit (TurboTax), show you where you currently stand in relation to that proposed or desired budget. These programs link with your bank and credit card accounts and track everything for you within minutes. Bonus: these apps and websites are appealing to the eye and the data is easy to read.

 

matthew-purcellMATT PURCELL

The most important financial advice I can give a client who is going through, or finalizing, a dissolution is to take the opportunity to fully understand the situation they are coming from, and plan ahead for their lives separate from their spouse. Through the dissolution the parties are required to make a full and complete disclosure of income, assets and debts in order to come to some conclusion regarding property division and support. These disclosures can provide a crucial starting point for someone’s financial plan moving forward. Some clients have never compiled all the information and taken a complete look at it prior to the dissolution process. Some were kept in the dark by their spouse.  Some were on top of their finances but don’t quite understand the impact of taking a single household and dividing it into two.

I always advise my clients to sit down with a financial planner to help them set up: 1) a budget 2) a plan to rebuild or replenish retirement accounts and savings accounts, and 3) simply an organized way to move forward in their lives. If not a financial planner, then at least make up a spreadsheet for their finances, or use one of the myriad of personal finance apps available. It can be difficult, as many people want to immediately regain as much as possible of what they had while married – a large house, vacations, frequent eating out – even though their new financial situation doesn’t allow for it.    Keeping track of finances and budgeting post-dissolution can be tough, but the only way someone can really move from a dissolution is to have the freedom, emotionally and financially, to move forward.

 

Based in Folsom, California, Forester Purcell Stowell PC can be reached at info@foresterpurcell.com or 916 293 4000. This information is general in nature and should not be construed as legal advice.

Sign up to receive legal updates and announcements from Forester Purcell Stowell and follow @law_fps 

Listen to “Split Decisions Radio” Show Archives and follow the conversation @_splitdecisions.

 

 

Share The Story