Do a financial checkup after divorce

On Behalf of | Jul 23, 2019 | Family Law And Divorce

Sometimes a Connecticut divorce is so amicable that the two people make a conscious decision not to change their plans for their final affairs. This may occur when the relationship becomes more platonic than romantic. Other times, couples choose to divorce in the earlier stages of trouble, before it spirals out of control and resentment builds up. These couples are a minority.

Most people would prefer not to have their exes inherit their hard-earned money and assets. However, this is exactly what could happen if they do not conduct a financial checkup after getting divorced. CNBC notes that one of the first things divorcees should look at is the beneficiaries on their accounts. Most people name their spouses as beneficiaries for their life insurance, retirement accounts, investments and bank accounts. This may be the time to change that.

It is important to remember that the named beneficiaries on an account carry greater weight than a will. Put simply, even if a will states that the children from a new marriage should inherit the life insurance policy and savings account, the wife from 20 years prior with which a man had no children may get the life insurance policy instead. This happens if he never updated the policy to name children as the beneficiaries.

Forbes also notes that some couples may choose to divide up retirement accounts during a divorce. These may be used to pay child support or spousal support orders. A Qualified Domestic Relations Order may be used to do this to prevent disqualification of the plan by assigning benefits to someone who was not the original plan participant.

Once this process is complete, both the receiver and the payer need to evaluate where they stand financially. Will they still have enough money to make it through retirement if they continue on the same budgeting path they are currently on? Or, will they need to cut some expenses and start looking for a new and higher-paying job. These are just some of the questions a financial checkup can tackle.


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