It is widely known that people should not make decisions when they are emotional, or going through a harrowing time like a death or a divorce. Losing a spouse is tragic but is a time when level-headed arrangements must be made. Important questions about Social Security benefits, IRA considerations, and assets of the divorced or deceased spouse must be addressed. Experts agree that it is in your best interest to study and secure your assets when you are suddenly on your own again. This process can be overwhelming so it can be more manageable to break it down into easy steps.
With joint financial accounts, the role must be changed to sole ownership. Banks require opening a new account and then transferring assets from the prior joint account. If this is due to a death they may require a copy of the death certificate for each transferred account. Money matters are serious business. If the change is due to divorce, there will usually be a court order or divorce agreement that must be presented. A common mistake people make in this step is failure to take into account any unrealized gains for each position and the person who would result in bearing the tax burden, if later sold. In this step, it is critical to have a financial or tax expert who can review the paper work.
Income and expenses must be scrutinized if you become widowed or divorced. Sometimes these situations include a substantial drop in earning power. If this happens, legal experts advise making a list of income and expenses, planning a budget, and a prediction of financial input and output. Financial experts can help us through this stressful process.
Credit reports become even more vital to a single person. Request and monitor your credit report and take meticulous inventory of joint and single accounts. All three credit agencies must be immediately notified of a change in marital status that can affect your credit score. You are responsible for all debts incurred jointly. Usually a brief conversation with a credit card company can alleviate some of this burden.
If you are facing or undergoing a divorce there are many financial factors to consider in present and future arrangements. It is a necessity to find an unbiased party who will honestly and fairly break down the assets, estimate tax projections and consider any children impacted by the divorce.
cbsnews.com, “Protect your finances when suddenly single” Ray Martin, Aug. 13, 2013