Right up there with losing some weight, getting a divorce is high on the New Years Resolution list for many. Is it for you?

January represents a new start, a renewed chance to improve your life, set and achieve your goals, find happiness or just end the misery of a bad relationship.

Christmas fun is over, as is the pressure to put on a brave face for the in-laws and the kids. Holiday overspending bills come in, and maybe you didn’t get anything you really wanted. Financial pressure rises.

It’s also a grey and cold month up here in the north. SADD and cabin fever set in when it’s too cold to go outside, and too-much togetherness can enhance conflict when it’s already brewing.

As we start 2023, the economy is in an interesting place, with high inflation, and lots of job opportunities. Is this the perfect time to salvage the increased value of your house, or maybe to buy it out while the value is dropping? Will an end of year work bonus provide some additional cash for legal and other expenses?

No wonder they call January ‘Divorce Month’.

Is this resonating with you? Let’s talk and see if we can help you find some clarity as you think about the 2 big questions: 

Should I stay or should I go?  And- Will I Be ok?

Schedule a free Financial Clarity session with me at: www.calendly.com/contactAGrace and we’ll tackle this new year together.

When you decide to remarry, especially either of you have children, here are some tips to create a solid foundation for your continuing relationship.

Consider a Prenuptial Agreement

When you have your own assets, intending to pass them on to your children, and your new spouse has the same-  a prenuptial agreement can be particularly helpful. Honest and open communication about money and what came before, is an important part of a new relationship so it can be be built on trust and fairness.

(For help here, email me for a copy of “How to Talk to Your Honey about Money”)

If either or both of you have gone through a divorce, you’ll want to avoid that contentious negotiation about dividing assets and protect each other the best you can. Consider what’s in those divorce settlements. Receiving alimony likely will end with remarriage, but the obligation to pay a former spouse does not end. Child support continues, and life insurance beneficiary designations may need to remain in place. Many prenups will state that premarital assets, what you own before this marriage, may go to the children, but assets you acquire during the marriage, are split between you.

States have their own rules, most requiring that a half or a third of marital assets pass to a surviving spouse. It’s important that this is specifically addressed in the agreement, to avoid problems later.

Update Estate Planning Documents

It’s important to do this after divorce whether you remarry or not. All of your legal and financial documents, account titles, and beneficiary designations should be updated.  Who should act as your health care proxy? Who is the beneficiary of your life insurance policy? Etc.

Wills: Do you have a will? A will states your wishes about who gets what when you pass away. You’ll want to make certain that your former spouse is not still your beneficiary! If your children are still minors, who will act as their Guardian?

Your children are the ‘natural objects of your bounty’- a legal concept. But your stepchildren, however close your bond with them is, are not.  If you want to leave something to a stepchild, you need to list it specifically.

Do you have a Living Trust? Review the terms of the Trust and who is acting as Trustee.

If you don’t have a Trust, consider putting one in place.

Trusts can be especially useful for blended families. You can  ensure that your assets benefit your surviving spouse during his/her lifetime, while providing that what remains after the spouse’s death passes to your own kids. Consider choosing an independent, neutral trustee, to minimize friction for everyone.

Check Beneficiary Designations

Review the beneficiary designations on 401(k) accounts, IRA’s and other retirement accounts, life insurance policies, or any account with a directly named beneficiary. These assets pass outside of your will, and must be separately updated. Your prior divorce does not necessarily revoke a designation of an ex-spouse as a beneficiary on everything.  Your prior settlement may give retirement assets to your ex- and these cannot legally be revoked. Spousal rights in retirement plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) are subject to special rules and may require your new spouse to sign off if you want your 401(k) to go to your children.

Consider Life Insurance

Life insurance can be a valuable tool to create an inheritance for your new spouse and your children. It’s not uncommon for a pre-existing policy to name your former spouse as beneficiary as part of the settlement, perhaps to secure child support payments. A new Life insurance policy can create the funds to benefit everyone you wish- your kids, your new step-kids, and anyone else.

Family structure is increasingly fluid. As your family structure changes, it is important to make sure that your estate and financial plans reflect your these dynamics. Your financial planner and estate planning attorney can help you take a holistic approach to your future, so you can enjoy the present.

If you need guidance on securing your financial future, contact me at adrienne@adriennegrace.com or schedule your free Financial Clarity session at www.calendly.com/contactAGrace to get started.

1.  Are you eligible to claim your children as dependents?  This is usually clarified in the divorce settlement agreement, but that’s not quite enough.  The IRS has a required form: Form 8332- Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.  The must be reviewed, signed and attached to both of your tax returns.  Go to www.irs.gov for a copy of the form and more information.
2. Did you remember that you can alternate who claims your children as dependents from year to year?  A child can be claimed as your dependent long as he/she is under age 19 (on Dec 31) and lives with you for more than half of the year, or is a full time student up to age 24.
3. What status will you use to file your taxes?  If you were divorced by 12/31, married filing jointly is no longer an option.  You can choose between single and head of household.  Check with your tax preparer to see which works better for you.
4. Are you receiving or paying alimony/spousal maintenance?

Remember that alimony is taxable to the recipient and a tax deduction to the person who’s paying.  If this is the first year you are receiving maintenance, and you haven’t been putting money aside for your tax bill, brace yourself for the shock, and start saving now.  You can open a savings account for taxes, and have money transferred monthly from your checking account, to minimize this problem going forward.  Discuss this with your tax preparer, to see if you need to make estimated payments during the year.

Child support is tax-neutral: it’s not taxable to the recipient, and it’s not tax deductible to the person who’s paying.

Your first tax return after your divorce, is just one more step on your journey to financial freedom.

That’s the reason I chose this phrase for the title of my book, because it really describes the journey we take in divorce and afterwards.

I offer you the following, that has helped me and hundreds of my clients make this life-altering transition. I know I repeated these things to myself so many times during and after my own divorce. I found grounding and a path forward. You can, too.

He is not your problem. No matter what you think about him, he is not your problem. No matter what you feel about him, he is not your problem.

He is who he is, and he is going to do whatever he is going to do. You can’t change who he is and you can’t control what he does.

He is only your problem because you empower him to become your problem. You empower him by allowing him to push your buttons. You empower him to be your problem each time you react in a way that causes you to lose your focus and compromise your values.

He is not your problem because what he thinks about you, what he believes you deserve or how he feels about you is not relevant to anyone but him.

He is not your problem because he does not have the power to define success or failure for anyone but himself. He does not dictate how you define who you are, and how you will live your life.

Who he is, is not your problem unless you want him to be someone different. What he does is not your problem unless you are wishing and hoping that he does something differently. What he says to you or about you is not your problem unless you want him to say something different.

He may make you feel crazy, angry, sick, sad, resentful, fearful, insecure, disempowered, small and guilty. He may be unfair, nasty, vengeful or cold. He may be a problem but don’t make him your problem. That will only distract you from your real problems

Your real problem is how to conclude your divorce and move on with your life, separate from him. He’s not your problem. Your divorce is, and that’s a problem you can solve.

And you don’t have to do it alone.

Does this resonate with you? If you need some support to move forward in your divorce with confidence and clarity, just click here to schedule a free Financial Clarity session with me. We can outline some steps you can take now, and see if it’s a fit for us to work together to support you more. Schedule your free financial clarity session today at calendly.com/contactAGrace!

1.  Allow everyone to grieve and mourn the holidays of the past. Divorce is a kind of death: of unfulfilled expectations, or the family unit we used to be. Don’t try to pretend that the pain isn’t there.  Allow your kids to talk about the past, acknowledge it and move forward to now and how you’ll build your new future.
2. Be Thankful.  Focus on what you and your children have, rather than what you’ve lost.  Revenge is not sweet.  Keeping your thoughts positive will benefit everyone.
3. Watch your spending. More is not always better.  With budgets that may be tighter now, don’t dig yourself a hole that will be hard to climb out of in January.
4. Create New Memories.  Use this time to create memorable new experiences for both you and your children.  Do something different.  Make something together.  Create new ornaments, baked treats, table decorations; take lots of pictures of your new holiday creations.
5.  Try to avoid some of the usual rushing around, to allow for some quiet time.  Be thoughtful.  Think about what will support you and your kids best, during this time of transition.

As you well know, divorce is a long process. My therapist friends tell me it usually takes two years for people to ‘get over’ their divorce.  Sometimes it’s longer. The first holidays are hard but once you get past this one, it will get easier. Really!

For Sheila, reducing today’s expenses by selling the family home and downsizing to a smaller place makes the most sense financially. Yes, it is yet another change that she and the children will need to absorb. It could mean changing schools and disrupting children’s neighborhood friendships.  In fact, all of the family’s habits and comforts will be disrupted more than it already is. Emotionally, this is a very tough decision. But financially, it is vital to keeping the family on track to their future.  As time goes on, there will be college tuitions to pay, weddings to be hosted, cars to be replaced and emergencies handled.

Clients come to me from all walks of life with the same question – “How can I maintain my lifestyle after my divorce?” For some – they simply cannot. Their marital combined income that may have barely supported just one household, will now be split into two. Where once Sheila had her husband on tap for quick household repairs and maintenance, she will now be hiring outside services. Sheila’s husband’s small business allowed him to be available for child care in the afternoons – now afterschool daycare costs need to be added.  Not only will Sheila have less money to cover expenses – she will also have more expenses.

This is a time of hard decisions.  As the adult in the family you need to be the one to face them- and help everyone, including yourself, move on.  Sometimes this very hard decision is the only one  that will provide a secure future for all of you.

Insurance

1. Apply for COBRA or other health insurance, if necessary
2. Change your insurance: auto and homeowner’s/renters from a joint policy to one for you, even if your address stays the same.
3. Draft and execute a new will, trust, power of attorney, living will and health care proxy.
4. Change the beneficiaries on your life insurance, 401k, pension and IRA (Roth and Traditional), 529 plans and any other accounts which have a beneficiary designation.
5. If purchase or maintenance of life insurance policies is mandated, follow up to ensure that it has been completed. Ask for proof, and set up an annual compliance procedure to be sure that policies stay in force with appropriate beneficiary designations

Assets:

6. Divide your assets- and debts- as agreed in the decree. You may need a financial advisor (CDFA) to help with this.
7. Change the locks and access codes and passwords on all secured items: real estate, vehicles, boats, safety deposit boxes, post office boxes, email, bank accounts, etc.
8. Remove your name, or your ex’s name from any joint accounts or mortgages. If the divorce decree requires a quitclaim or warranty deed, follow up until it is executed and recorded.  Your attorney may assist with the deed.  If refinancing is required, start the process as soon as possible.
9. Meet with a financial advisor (Certified Financial Planner, or Certified Divorce Financial Analyst) to put together a financial plan for your new future. If you had an advisor during your marriage, consider working with someone new, to avoid potential conflicts of interest.  Review investments received as a part of the settlement to determine if they are appropriate for your new circumstances.  Reallocate as needed, especially regarding Steps 16, 17, below.
10. If transfers of investment, retirement and savings accounts are included in your divorce settlement (IRA, Roth IRA, other accounts), follow up until the transfers are made into your own accounts. Your financial advisor can be very helpful in tracking this.
11. If a Qualified Domestic Relations Order (ODRO) is required to divide 401k, 403b, pensions, other retirement accounts, contact your attorney, or a QDRO specialist to have the order drafted and sent to the appropriate place(s). Follow up, or have your financial advisor help you follow up until the orders have been fulfilled and retirement funds have been transferred to your name.
12. Hire a new CPA or tax preparer to help with your tax return. Review and adjust your withholding allowances to reflect your new filing status, income level, payment or receipt of maintenance, etc.
13. If you or your spouse is age 70 or over, recalculate your Required Minimum Distribution.

Budgeting, Banking and Credit

14. Review your income and expenses. Update or create your budget to live within your means, or determine how much additional income you need and what you need to do to earn it.

1. Open a checking and savings account in your own name, if you don’t already have one.
2. Establish a credit card in your own name, if you don’t already have one.  Use it wisely!
3. Set up direct deposit or automatic transfer for payment or receipt of child support and maintenance.

Congratulations!  Your transition is underway.  You are several steps farther along your path to empowering yourself, financially.

Even after the judgement is entered, there are many things you must do to be certain that the financial and legal aspects of your life are in order for this next phase of your life.  Review your settlement document carefully.  You don’t want to miss any one of these important actions.

Use this checklist to help wrap important follow-up items after your divorce is final. Not every item may apply to you, but there are likely several for you to take care of.

Documents and Titles

1. Get a copy of the certified divorce decree; make extra copies and store in a safe place. Keep your marriage certificate (original or a certified copy), as well.
2. If you intend to change your name, don’t forget these places:
   1. Driver’s license, car title and registration
   2. Social security card
   3. IRS records
   4. Life, health, disability insurance
   5. Employer records
   6. Credit cards
   7. Bank, brokerage and investment accounts
   8. Professional licenses
   9. Title to real property
   10. Utility bills
   11. Passport
3. You and your ex-spouse will need to determine who will hold the originals of important documents, such as children’s passports, birth certificates, medical records, religious documents, photographs, videos, keepsakes. One of you can keep the original, but the other should have a copy.
4. If your divorce decree requires the transfer of title to cars, motorcycles, or boats, prepare, sign and deliver the necessary documents to complete the transfer. (Don’t forget Step 8, about insurance on those items).
5. Close any joint credit accounts: credit cards, department store charges.
6. Once joint accounts are closed, order a copy of your credit report, to ensure that changes have been made, and there are no unauthorized charges

A large majority (80%) of “grey divorcees,” people who divorced at the age of 50 or older, say they will delay their retirement because they need to work longer than planned and more than half (62%) say their post-divorce savings and investments will no longer be adequate to fund their retirement.

“Going through a divorce can be difficult at any age, but older couples face unique challenges in retirement planning as a result of later-in-life separations,” said Christine Van Cauwenberghe, Assistant Vice-President of Tax and Estate Planning at Investors Group. “With limited earning power and less time to recoup their financial losses, grey divorcees need to re-visit their financial plans.”

More than half (53%) say they have had to adjust their retirement plans and of this group, 55% say that their plans completely changed. Almost half (47%) say they will have to scale back on their anticipated retirement lifestyle.

“Divorce is an emotional process that can cloud your ability to make sound financial decisions that will ultimately affect your future,” said Christine.

The divorce process is overwhelming – especially when more than a third of grey divorces were classified as “bitter divorces.” Of those experiencing bitter divorces, a significant majority (80%) say they found it difficult to make financial decisions surrounding their divorces as compared to 54% of all grey divorces.

Almost three quarters (74%) of respondents who sought the advice of a financial advisor during their divorce agreed they were given sound financial advice throughout the process and 82% agreed their advice was helpful post-divorce.

And those who sought financial advice before their divorce were more confident about their retirement with 39% feeling they would still have enough savings and investments to fund the retirement lifestyle they had planned. Of those who did not work with a financial advisor, only 28% believe they still have enough to fund their retirement.

“After any life change it is crucial to reassess your current financial plan to ensure that it reflects your new direction in life,” said Christine. “As you get closer to your retirement years there is a greater urgency to have a financial plan in place that helps you to achieve the lifestyle you envision whether it be together or apart.”

The question always rises: “How can I get through this in the easiest way?” I am not suggesting that divorce could ever really be considered “easy.” But there are resources to help you get through the process in a less stressful and more focused manner.

Supporting yourself with a team of professionals who will guide you through the process to help you achieve the best outcome for today and your future is one of the smartest things you can do at this juncture. One member of the team- a neutral financial professional- can help both of you achieve a fair and equitable financial settlement. Certified Divorce Financial Analysts (CDFA^TM) are trained in the fundamentals of divorce and finance and have extensive experience in meeting the special needs of divorcing couples.  Knowledge of financial planning concepts and divorce financial issues enable your CDFA to provide you with a structure and a process to help you to design your optimal financial settlement.

There are so many things to consider when trying to fairly divide your assets and debts, find ways to live within your new means, and develop your financial future. A CDFA can work simultaneously with both of you. They help you gather the necessary financial information to help you understand your economic situation and help to provide a structure and process for you both to discuss your concerns, with your questions heard and dealt with respectfully.

It is common in most relationships for one of you to be more financially savvy than the other. That person usually handled the financial matters for both of you. Often couples request that the less financially savvy spouse receive additional assistance to help bring them “up-to-speed.” By helping the “non-financial” spouse to be better informed and confident on financial issues, informed decisions can be made, and the process can move forward more easily.

A neutral financial specialist is cost-effective for you in several ways. First, only one professional may be needed – not one for each of you. Second, the initial process often takes place without attorneys present, saving their hourly costs. Most importantly, they provide focused financial expertise that often results in creative and effective financial solutions. They are trained and experienced in researching and analyzing personal, business and tax issues in divorce.

With the right professional expertise, working in Collaborative process can help you to take some of the stress out of your divorce, and help to make your process more successful emotionally and financially.