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Taking care of post-divorce finances is important

It takes a great deal of planning and strategy when Florida residents make major financial decisions in their lives. Buying a home, for example, involves a consideration not only of what home to purchase and what amount of mortgage one can afford, but considerations of what will happen after the home is purchased and how it will impact the rest of the person's financial picture.

The process of asset division in a divorce is similar in some respects. Last week, this blog discussed how certain rules apply to ensure that both parties know what assets are at stake in the divorce. The property division process goes much deeper than this, however, as individuals also need to take into consideration how the assets will be handled after the divorce, and what changes may need to be made to protect the person.

To begin with, divorced spouses should establish new bank accounts in their own name. This means the joint account owned by the spouses ordinarily will be closed, and a separate account is opened.

Likewise, new credit card accounts, including store accounts or gas credit cards, should be set up and the old ones should be closed. By taking these steps, individuals can ensure they will not be on the hook for debt that may be incurred by the ex-spouse after the divorce. At the same time, the person can establish good credit in his or her own name.

Individuals should also make the appropriate changes to their 401(k), retirement plans, and other life insurance and investment accounts. For example, the beneficiary designation should be changed on these accounts to ensure they are not paid out to the ex-spouse. Similarly, investment account changes will ensure the other party cannot close the account or take out money. Many individuals also choose to get a life insurance policy on the other individual when alimony or child support payments are being made, so that income will continue to be paid in the event the payor dies prematurely.

Ultimately, the above are just a few of the post-divorce considerations that should be taken into account both during and after the divorce. By properly managing these assets, individuals can best protect themselves and their financial health.

Source: The Advertiser, "Landing on your feet financially after divorce," Mary Fox Luquette, Dec. 12, 2015

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