Join Melissa Fradenburg for Part 2 of our first "Mini-Bite" series. This series is all about breaking down your post-divorce checklist into manageable mini bites. Part 2 addresses managing your finances in the first six months after divorce. Melissa dissects critical aspects such as establishing a post-divorce budget, splitting assets, removing your name from any joint accounts, and why timely completion of paperwork is non-negotiable. Get the details regarding the processes of asset transfer, setting up new accounts, and how partnering with a financial advisor can make things a lot easier for you.
So tune in and equip yourself with the valuable advice that will make your transition smoother and help you build your best life post-divorce. If you missed Part 1, CLICK HERE TO LISTEN NOW
To learn about how Pearl Planning and Jacki Roessler, CDFA can help you though your divorce or schedule an initial complimentary consult, CLICK HERE
If you're already divorced and are looking for post-divorce financial planning from an advisor who specializes post-divorce planning, contact Melissa Fradenburg CLICK HERE TO SCHEDULE A CONSULT
Links are being provided for information purposes only. We do not suggest that listening to this podcast will make you wealthy. Pearl Planning is not affiliated with and does not endorse the opinions or services of Brian Cohen or his affiliates. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Pearl Planning cannot guarantee that the information herein is accurate, complete, or timely. Pearl Planning makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax or legal position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Pearl Planning financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.
Speaker 1:
Welcome to the Wealthy After Divorce podcast. Jackie Ressler, a divorce financial planner with almost 25 years experience, and myself, melissa Freidenberg, financial advisor with Pearl Planning. We are both certified divorce financial analysts and your co-hosts. If you're thinking about divorce or in the process of divorce, this is a time for you to take a deep breath and give yourself permission to gain clarity on the financial decision they're facing. While the term wealth typically refers to money and possessions, we know that truly being wealthy means a whole lot more. Together with our guests on this podcast, we will help you live wealthy after divorce. Hello and welcome to the Wealthy After Divorce podcast. This is Melissa Freidenberg. This week is part two of the mini-bite series of what to Do After your Divorce, a simple outline of the steps that need to be taken, and this week we're going to be talking about the things that don't necessarily have to happen right away, but within one to six months of your divorce being final, you definitely need to sit down and check off your list. So this one is pretty important and I think, based on the client interactions that I've had, it's everyone's least favorite to sit down and do, but maybe one of the most beneficial, which is to do a post-divorce budget with all the things, all your expenses. As it relates to children's expenses, you need to review your agreement to see what expenses are being split with your former spouse and also it's important to kind of figure out you know which things. If you are splitting certain expenses, have you submitted them and what is your portion of those payments? So for things like sports and extracurricular activities, oftentimes in a divorce situation those expenses will be split. So it's really hard to know looking ahead what your expenses are going to be, which is why we say, a few months after your divorce is final, is it good time to sit down, look back and see what those actual numbers are of the things that you're paying for. When you're doing your expenses, don't forget new expenses like Cobra for insurance, or if you're paying your own health insurance. That likely went up If you were previously on your spouses a child support if you have to pay it. Spousal support if you have to pay it. Maybe your housing situation changed. So either you are renting or you have a new home from your marital home or you're responsible for the entire mortgage payment now. So those are things that need to be updated in your budget as well, even if things feel comfortable now, it's important to have that budget so that you know how much you can save for the future. So whatever's left over, if things are not feeling tight, rather than just having that sit in your account and spend it, prepare for things like the cost of sending kids to college or for retirement or whatever your future goals are. In order to do that, you really need to know what your monthly expenses are in your new normal.
Speaker 1:
The next one, dividing assets. This is something that doesn't have to be done like the day the divorce is final. Likely, bank accounts will probably split right away, but other things like brokerage and trust accounts those sometimes require a few additional steps and with bank accounts, maybe there are still things that you were settling up with your ex-spouse, so bills that you had to pay out of them together. Now that everything is likely cleared out as far as outstanding bills and checks that you are jointly writing from the account, make sure to remove your name from any accounts that you had with your former spouse. So maybe you split the accounts, but it's always important to check and make sure your name is off of them, especially if these accounts have some sort of line of credit or overdraft, because you will be held responsible for anything your ex-spouse does if your name is still tied to that account. So very important to double check that. Some people miss this step. I've seen it happen and it's not ideal.
Speaker 1:
Brokerage and trust accounts Again, those require a few additional steps and unfortunately every custodian has a different form or process, it seems. When I'm helping clients with this part of the process. So do contact each account custodian and by custodian it could be the financial advisor on the account or where the assets are held. The easiest way to find out where to call would be the phone number on your statement for these accounts and ask what paperwork is needed to transfer these assets. They may require an authorization letter, a transfer form. They'll likely ask for a copy of the JOD. You can call and find out what paperwork is needed, but before you can actually process this transfer you'll need to open up a new account to accept these transfers.
Speaker 1:
In many cases you may be working with a new financial advisor from the one that you worked with with your spouse, and in that case they will open the accounts there to receive your portion. In other cases you may go and use an online broker dealer to open an account to receive it, or you may open a separate account at the same custodian. So if you call and you don't have an account set up, they can only set one up for you there. I promise you that this part of the process is easier to do with a financial advisor someone you have a relationship with because it does get a little complicated when you're making sure that you're opening an account that is titled the same way as the account that you're moving. Now, if it is a trust account, you're likely going to need to meet with an estate planning attorney to set up your own trust in your own name, because it's likely in a joint trust. A little tip with this If you haven't done that yet likely you've had a lot of things from these mini-byte series I know to get done.
Speaker 1:
So if that's not completed yet, you can always set up what's called a TOD or transfer on death. Now, this is not a long-term solution for not having a trust in your own name, but it's a way for assets to be transferred to your beneficiaries without going through probate and can be done again on an individual taxable account. But those are again things that may have started immediately after the divorce, but something about a month to six months out. You really want to make sure they were done, they were done properly. Maybe you just haven't gotten around to sending in the paperwork or getting all the forms filled out that need to be filled out. You really want to have this done sooner than later so that you can make sure that you get the right amount when these accounts are split and then that those assets are invested properly for your risk tolerance. If you are the one receiving a portion of the investments because that is likely changed since your investments were made as a married couple now that you are on your own Now, in sub-cases you may have government bonds.
Speaker 1:
In this case, you'll need to complete a request to reissue. Now I'm going to link in the show notes the contact info that we have here to request a reissue of US savings bonds. You're going to have to sign and have notarized and submit the original bonds. If you have them. You may need to consult an accountant to determine the tax consequences of this as well before moving forward with this. But again, if you do have government bonds that need to be reissued, this is something that should again be handled in that first six months.
Speaker 1:
Now the next step again, you may have already started the process, but because you've had a lot of things on your to-do list, something that needs to get started now, if you have not already, would be, if there are qualified retirement plans to be split, you would need to get a quadro, qdro. Usually in the judgment of divorce there will be contact info for a provider that can help you with that. There's gonna be paperwork to complete. You're gonna need to provide a judgment of divorce or settlement agreement language, and you're likely gonna have to pay a portion of the fee. In most cases you're gonna split that cost, whether it's your retirement account being split or your ex-spouse. Most of the time that's gonna be split between the two of you and that will need to be paid before that document is prepared. So you not only have to pay your portion and submit your portion, but also make sure that your ex-spouse is reaching out and providing the documentation needed to get that completed. If multiple accounts are being equalized or if your account is being divided, you'll need to submit statements for the accounts that are in your name and you're also going to just like with taxable accounts need to have a place to receive your portion.
Speaker 1:
If you are receiving a portion of your ex-spouse's retirement plan Now, you can get that started before that is set up, but it's certainly something that you wanna get started sooner than later. Process does take some time for the quadrilocrepair to draft the documents needed. Then it will need to be submitted to your ex-spouse's employer or to your employer if it's your plan being split. There's also a waiting period after that's approved by the employer. So you do have a little bit of time, but you do wanna make sure that you have an account that's going to receive those funds. Typically it's gonna be an IRA, which is an individual retirement account, again in your name. You may already have one that can receive these assets, but this is something you wanna look into and, again, something that you can do on your own without a financial advisor. But if you do have a relationship with a financial advisor, it can absolutely help with this part of the process.
Speaker 1:
The other thing to look at here, if you haven't already done so, are real estate assets. So you may need to obtain a quick claim deed for transferred real estate, that is, if you are not immediately refinancing or selling the marital home. In that case, the deed will be taken care of in that process. But if you are staying in the home and your ex-spouse is not, or vice versa maybe your ex-spouse is staying in the home and you are not you wanna make sure that the deed reflects that for transferred real estate. So again, it may just be a case of checking to make sure your ex-spouse did it, or you may need to be the one to obtain that, and we're seeing this more and more because of the current rates for mortgages are so much higher than previously. Even just a year ago, your rate was probably about half of what it is now, because couples agree that one person can stay in the marital home and just take the ex-spouse's name off the deed. But if you have decided that you agree to do that again, making sure that that is filled out this would be the time to make sure that has been completed.
Speaker 1:
Now. We talked a lot about transferring assets, right? But what about just making sure that those investment accounts that maybe you didn't have to transfer, that you changed the beneficiaries on those accounts? So, whether it's your work, retirement plan, life insurance policies, investment accounts that maybe you know you didn't have to split because he got one and you got the other, or if it's an IRA in your name that's not being split, check to see what the beneficiary designation is, because in most cases it's your spouse, especially for retirement plans. Most plans pretty much require that it's your spouse when you're married and they do not automatically remove them as the beneficiary when you get divorced. That is up to you. So this also where this comes in.
Speaker 1:
Oftentimes I see people wanting to change the beneficiaries to their children, and you certainly can do this. But this is again something where estate planning comes in, because if your children are minors, you really can't just leave them a large sum from a retirement account. You would wanna have some estate planning documents in place somebody who is going to be in charge of those assets until your minor children are old enough, and then also check to see do I need to meet with an estate planning attorney to have this set up or can I just change the beneficiaries? And the last part of this mini-bite would be to update your financial plan, which all of the things I've mentioned so far in this episode really cover your full financial plan. But if you have either not done financial planning in a long time, maybe you did it as a couple many moons ago. Maybe you've been putting it off and really haven't done any financial planning. Now is a great time to set up a time to meet with a financial planner and make sure that you're on the right track with retirement savings, future savings. Maybe it's to buy a house or just really rebuild that like emergency fund and get a handle on your cash flow. A financial plan can really help you with all of those things. So now would be a great time to really sit down and have someone look through everything and make sure that you are on the right track financially. Of course, at Pearl Planning we'd be happy to help you with that. I will link our contact in the show notes for this episode and please do reach out if you find yourself in this position and want to have a financial plan post-divorce.
Speaker 1:
Thank you so much for tuning in to our mini-bites part two. Part three will be with my co-host, jackie Rassler. That will be what to do within the first year after your doors. So we have covered what needs to be done right away in our mini-bites part one and this episode talking about one month to six months in, and the last episode will be stuff that can wait, but should be done in the first year. I hope you're enjoying this mini-bite series, as always. If you are enjoying these episodes, please do share them with others that may benefit. We really love that. Jackie and I are so excited to see more downloads every week and more listeners tuning in. Thanks so much and have a great day. Thank you for listening to the Wealthy After Divorce podcast. You can find more information on Melissa Freidenberg and Jackie Rassler on our website, wwwpearlplancom, as well as on our podcast website, wwwwealthyafterdivorcecom.