In the midst of a divorce, financial planning might be the last thing you want to do. The fact is, though, that taking control of your finances in a tumultuous time can be empowering—and it can help you ensure you are making smart choices for your future, both financially and otherwise. In this article, our Raleigh CPAs are sharing their top five tips when it comes to financial planning for divorce filings.
What Does Financial Planning for Divorce Filings Entail?
Financial planning for divorce processes involves developing financial strategies to navigate this aspect of separation and achieve the best settlement possible. The right financial planning during a separation will make you aware of all of your rights, assets, and options, and set you up for success in this new chapter of life.
Working with a Raleigh accountant who has hands-on experience with financial planning for divorce filings is highly recommended, as they have the experience to navigate complex legal and financial language and processes. Such a planner will advocate for you in the middle of a process that can often be emotional and complex. Plus, a certified accountant can help you envision the bigger picture and plan for the long term, even when it is difficult for you to see.
Top Financial Concerns in a Divorce
Married couples, no matter how long the relationship, typically wind up with intermingled finances in one way or another. Below, our Raleigh CPA’s are sharing some of the most commonly cited financial concerns in a divorce.
The division of bank accounts, non-taxable income including life insurance proceeds, retirement plans, and other financial assets are a few financial items couples address first in a divorce process. Early withdrawals and distributions from certain accounts can lead to penalties, so it’s important to understand exactly how and when each financial asset should be divided.
If the couple owns a home together, or any other properties, the allocation of real estate assets must be considered. The property might be sold, with the money being split evenly between spouses, or one spouse may buy the others’ share of the property for full ownership. The choice is up to you, but it’s an important decision to make sooner rather than later.
Mortgages, student debt, and credit card debt, along with other money each spouse might owe, should be disclosed in order to make sure one spouse isn’t left with the burden of the other’s debt. Proper rearrangement, especially by a local accountant, can help make sure credit isn’t negatively affected in the process.
How to Plan for Financial Allocation
Gather Key Financial Documents
Before you begin financial planning for a divorce, gather all important documents. Your financial planner will help you understand what information you need, but some of the documents you may want to collect copies of are:
- Stock and bond assets
- Real estate and mortgage information
- Tax return documents
- Loan documents
- Checking and savings account statements
- Credit cards statements
- Personal and business tax returns
- Lists of marital and non-marital personal property
- List of assets and debts acquired both before and during the marriage
- Financial statements
- Business holdings
- Any child or spousal support agreements
- Pre- or post-nuptial agreements
- Life and health insurance policy information
Know What Bills Are Due and Take Care of Your Credit
Unfortunately, billing cycles don’t pause in the middle of divorce proceedings, so it’s important to make sure your payment information is up-to-date so you can avoid any hits to your credit or dodge overdue payments.
If you haven’t already, you can set up alerts to notify you of any upcoming or missed payments. It’s also a good idea to closely monitor your credit report to understand what accounts are in your name.
Analyze Settlement Options
Coming to an agreement in a divorce settlement requires both navigating your unique situation and the laws in your state for asset allocation. North Carolina is considered an equitable division state, meaning a fair division of assets is determined on a case-by-case basis depending on each couple’s debts, finances, and other extenuating circumstances.
Rest assured, it is not uncommon for one spouse to take full ownership of one asset while giving up complete ownership of the other. In fact, if you are the party who gives up an asset, such as a shared car, you’ll most likely find it exciting and freeing to own your own car in the future. It may not seem exciting now, but in a bit of time, you’ll enjoy your new asset all to yourself!
Update Estate Planning Documents
Chances are that your wills and other estate planning documents contain mention of your spouse, so in the event of a divorce, updating those documents should be a top priority. After all, you don’t want the other party to receive the money you work hard for, nor do you want them to inherit a keepsake that means a lot to you. By updating your will and/or estate, you’re protecting your assets by knowing they’ll go to someone who is well deserving of them.
In updating your will, you should make changes to your list of beneficiaries, confirm power of attorney, revisit guardianship wishes, and more, to make sure your will is just like you want it after your divorce.
Create a New Budget
Moving forward mindfully with your new finances means moving forward with your new life.
Take into account your adjusted income, expenses, insurance plans, and investments, to create a financial plan that aligns with your wishes for yourself and your future.
You can do this in a tool as straightforward as a spreadsheet, or you can enlist the help of a local, trusted accountant. For reliable financial assistance, contact Steward, Ingram, & Cooper, PLLC in Raleigh, NC today. Our accountants can help you map out your financial future so there won’t be any surprises along the way.
Contact a Raleigh Divorce Planner Today
If you’re in the middle of a separation or divorce and feeling like you might need a hand with your finances, our accountants at Steward, Ingram, & Cooper, PLLC can offer plenty of guidance when it comes to financial planning for divorce matters.
Our team of financial planners will guide you through collecting the necessary documents, aligning your settlement with your needs, and creating a financial plan for moving forward after your divorce.
Contact us today at (919) 872-0866 to schedule a consultation or fill out the form below to take one of those stressors off your plate.
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