No one gets married thinking the marriage will fail. Divorce is an unexpected reality for which couples hardly prepare for. It is an emotional drain for the entire family and an immensely exhausting financial exercise. Getting back your life on track post-divorce may appear an uphill task but taking these crucial steps can ease the process. Here is how to come out of financial insecurity while heading for a divorce.
Assess Your Income Needs
If both you and your spouse are earning, then divorce may mean curtains for one income stream. So, to comprehend the financial implications of a divorce, do assess the contributions you both make as a couple towards meeting your expenses. Now, list out your immediate requirements, expenses and financial commitments that cannot be ignored. This will help you arrive at a rough figure for the money you would need to continue maintaining your standard of living. Ideally, you should have an emergency fund in place even while being married to face tough situations like a divorce. Nevertheless, you can still work on such a fund for other unexpected emergencies of life.
Analyse Your Needs
Once you have an idea about your income needs, analyse other important aspects of your finance that will help you function smoothly. If you are not covered through a health insurance plan, get yourself adequately covered. If you are, see if the cover needs to be enhanced. If you are a custodial parent, it will be wise to get your child a health insurance cover to deal with medical emergencies. You should also buy a term plan to secure the child’s financial future. All this will have to be done besides striving continuously for a handsome retirement investment corpus.
Update Key Financial Documents
When your divorce is in the final stages and assets are being divided legally, it is advisable to update all your important financial documents. The updates may include change of name and other particulars and also change of nominees. This needs to be done not just for bank accounts, but also for investments and insurance policies. If you had joint bank account with your spouse, it will be wise to close them and open a new one for yourself. If you have joint loans, decisions will need to be taken on it and responsibilities will need to be assigned. Under no circumstances is not paying EMIs an option on a joint loan as doing so will damage both your credit scores, making it difficult to borrow again in the future. If you have a will, it may need to be updated.
Divide Your Assets
In case any of the assets are being held jointly — for example, a house — it would be advisable to sell it off and divide the proceeds. The assets should be divided in a manner that leads to no further legal complications.
Hire An Expert
Hire a professional to ascertain the financial repercussions of the divorce. If you are a woman, a professional can help you to assess the alimony and maintenance that you are entitled to after the divorce. It is also important to decide in advance whether alimony will be paid lump sum or as regular maintenance. For a man, an expert can help you to reduce the legal delays and complete the divorce process smoothly.
Before initiating the divorce process, a woman should make herself aware of all the family income and assets. She should be clear about her financial needs after the divorce to demand an appropriate share in the family assets and alimony. A man should be ready to bear the alimony burden and to give up a share of assets.
The writer is CEO, BankBazaar.com