Family Law

Your Family's Financial Plan: Are You Prepared in Case of a Family Catastrophe? (Part Two)

By Ben Stevens

Several weeks ago, I published part one of “Your Family’s Financial Plan:  Are You Prepared in Case of a Family Catastrophe?” by Aimee Waite, a Financial Advisor with Raymond James & Associates.  Today, I am pleased to bring you part two.  Thanks again to Aimee for sharing this information with my readers.

Part 2: Changes to be made to your financial plan if you get divorced and how to figure your expenses and income as a newly single person.

Whether you are a man or woman getting divorced, you will need to evaluate your current financial plan and make necessary changes. Here are some of the most important things to keep in mind.

1. Create a budget. For an entire month, keep track of your income and expenses and then decide how the divorce will change them. Your bank statement is a good indication of both income and expenses. Then ask yourself - after the divorce, will you have less income? Higher expenses? Your financial advisor is also a good resource to help you determine what you have and what you’ll need. Remember, it’s best to estimate expenses as higher and your income as less to make sure you have enough money available.
2. Evaluate insurance needs. 
   • Health Insurance:  After the divorce, will you still have health insurance? Will your children? Who pays for the health insurance? And is the coverage only temporary? 
     
   • Life Insurance:  This is especially important if you are receiving child support or alimony payments from your ex-spouse. If you are, make sure that your ex-spouse has life insurance and that you, as the custodial parent, are the beneficiary. And periodically request proof that the policy is in force.
     
   • Talk to your attorney about whether this should be a part of your divorce settlement.
     
   • In addition to life and health insurance, make sure to change your beneficiaries and modify your property insurance as necessary.
     
   • If you need new insurance, make sure to get several quotes so you know you’re getting the best coverage at the best price.
3. Revise your will and your estate plan. Your attorney, financial advisor, and tax advisor will be able to help you with these as there are many factors to consider. Specific areas to note are how the divorce will affect the tax aspects of your estate plan, gift tax implications to consider, and changing the power of attorney, personal representative, or successor trustee listed in these documents.
4. Financial Goals & Investment Style. You may find that after the divorce you have new financial goals and you need to prioritize them. For example, now it may be your ex-spouse’s responsibility to pay for the children’s college education giving you the opportunity to travel. Or, you may need to wait a little longer until you retire because your annual expenses have increased. Your investment style may also change based on your needs. It may be necessary to be more aggressive or conservative with your investments. Sit down with your financial advisor to discuss your needs and then prioritize them. Decide on an investment style that best suits your situation.

Full post as published by SC Family Law Blog on April 11, 2008 (boomark / email).