Your Money Matters: Surviving a divorce

Nicole Middendorf
www.nicolemiddendorf.com

Nicole’s Tips:

How to handle outstanding debt
You need to know the difference between good debt and bad debt. You should be careful when it comes to using credit to protect your assets and your future because we live in a negative savings society. Contact credit bureaus to get a copy of your credit report. If there are credit cards that have a zero balance, call and cancel those cards. As part of a divorce, remember that the creditor wants the debt paid regardless of the situation. So, if your spouse takes a credit card with your name on it and does not pay that debt, the creditor will come after you.

How to handle joint bank accounts
When you get divorced you want separate accounts. Most of the time one party will use an account more often than the other. So let’s say there is a bank a and bank b one spouse will take a and the other spouse will take bank b. it’s not that you’re taking each account and dividing it. Www.Annualcreditreport.com is the place to go to to get a list of debts because you want to apply the same philosophy to that If you’re in the divorce process and don’t have a checking account in your own name go get one. It’s important to have accounts in your own name and understand what you have and make sure that you have your own credit.

Assets that shouldn’t be overlooked because your ex-spouse can sell them.
One very commonly overlooked asset is your life insurance policy. If your soon-to-be ex-spouse is the sole beneficiary, you may decide that you want to sell the policy in a transaction called a life settlement. This may net you a nice sum of liquid money that can be used to finance your newly single status. However, insurance companies often may not tell you about this option, and many attorneys don’t know about them. So make sure you find a reputable secondary market specialist to consult like GWG Life.

How to have liquid money to pay for legal fees or other expensive costs
There are three different general phases of the divorce process: the beginning of the divorce, the middle of the divorce and after the divorce. In each of these stages, your budget may be different, so you should make sure that you have liquid money available at all times. In the beginning, you will need liquid money for the retainer to hire an attorney. You should consider putting this liquid money in a money market account rather than a savings or checking account. This is a vehicle where you are able to earn more interest on your money. Make sure you understand the difference between assets, regardless of whether you are single, married, or divorced. It is always a good idea to have copies of statements and to start listing all of you assets and liabilities.

Deciding whether to keep or sell the family home
You should understand how your divorce settlement will affect you now, as well as five, ten, fifteen and twenty years from now. A house is not a liquid asset and if you look historically at the stock market, a house may have less appreciation potential compared with money set aside for retirement. This is where it is very important to establish a financial plan.

Retirement funds
If you receive retirement assets from your spouse’s 401(k) plan you may need a QDRO (Qualified Domestic Relations Order) to separate those assets. The QDRO is a legal document that is separate from your divorce decree. This legal document is sent to the benefits department of the 401(k) plan provider to instruct them how the assets should be divided. Make sure the QDRO is written correctly before the divorce is final to ensure that you receive your retirement assets. Some benefit plans cannot be divided. In this case, you want to look at other assets of the marriage and receive those instead. For example, if a pension cannot be divided, take more of the 401(k) assets of the other spouse. If you receive retirement assets from your spouse’s IRA, you will need a copy of your divorce decree and a few other financial forms to separate those assets. With the 401(k) and IRA, you should change the account into your name and roll the assets into another IRA Account. This process is known as a direct rollover.

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