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Your finances post-divorce or separation

A life change, including a divorce or separation, creates a need for an assessment of your personal finances to ensure a smooth transition and safeguard you and your children’s financial well-being. This can feel like a big undertaking, but with the help of a financial blueprint you can work through the various areas of your finances one piece at a time and set yourself up for success based on your new needs and goals.

As a starting point, I recommend you review your income/expense and insurance coverage. From there we can work through the other areas of your finances.

Income and Expenses: Where will your money be flowing into your family and what are your financial needs post-divorce? 

Creating a spending plan that reflects your new financial reality, taking into account changes in income, housing costs, utilities, insurance premiums, and other expenses will be incredibly impactful in determining how your needs are different. I have a worksheet to make this easier that I am happy to provide.

Insurance Coverage: Evaluate your insurance coverage, including health insurance, auto insurance, and homeowner’s or renter’s insurance, but especially life insurance. If you are receiving child support from your ex, consider buying a life insurance policy with your ex as the life insured so if anything should happen to him/her your income from that person is not impacted.

Debt: What debt will you be carrying going forward and what is your plan to pay it down?

Assets and Liabilities: Identify your assets including bank accounts, investment accounts, real estate, and how will any of this as a result of the changes you are going through. If there is a pension that needs to be split or CPP earnings that are being reallocated take action immediately.

Retirement Planning: It is likely your retirement goals and needs will change so your strategy will need to be adjusted. How does the division of your investment assets impact your goals? An update to your plan will benefit you in determining your new financial independence number so you can set up your investment strategy according to your new needs.

Estate Planning: Update your estate planning documents, including wills, trusts, powers of attorney, and beneficiary designations on retirement accounts and life insurance policies. Make necessary changes to ensure that your estate plan reflects your post-divorce wishes and protects your assets and interests.

Tax Implications: If you are receiving or paying spousal support it is important to understand how this is recorded when you file your annual income taxes. If you are receiving spousal support it is recommended that you set aside a percent based on your overall income so in the event you receive a tax bill you have money available to pay it without going into debt or incurring interest on the amount owing.

By addressing these key areas of personal finances as you work through your divorce or separation, you can better navigate the financial implications of this change and lay the groundwork for a secure financial future moving forward.

I offer complimentary financial blueprints in order to help parents create financial stability and freedom for themselves and their families. If you desire an appointment to see if we might be a fit for working together and to learn more about the process, please book an introductory appointment for us to meet.

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