Divorce and Your Finances | Redstone Federal Credit Union

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Divorce and Your Finances

The end of a marriage is the beginning of an entirely new set of financial circumstances. While navigating through this transition with your family, don’t neglect your financial life. It also requires your attention.


Here are some basic steps to take now if a divorce is imminent, according to financial experts:

  • Close all joint accounts, credit cards should be paid in full and shut down.
  • Establish accounts in only your name.
  • Get a big picture of your family’s finances, including all insurance policies, retirement accounts, and mortgage information.
  • Make sure that there is an accurate and equal division of the couple’s properties.
  • If the family home is not being sold, then refinance it in just the name of the person who will keep the house.
  • Get a post office box and safe deposit box for confidential mail and personal effects. Store important electronic documents online with My Virtual Strongbox, available through Online Banking.  

The financial effects of divorce could be worse than any downturn in the economy. An average bear market lasts 15 months and results in a 32 percent loss in investments, according to investment experts.

Meanwhile, a divorce can wipe out 50 percent of a person’s assets, says Ken Moraif, founder and senior advisor of Dallas-based financial firm Money Matters, in an article for US News Money.

For women approaching or in retirement, becoming divorced, widowed, or unemployed had detrimental effects on their income security, according to a 2012 Government Accountability Office (GAO) report on retirement security.

Moreover, divorce and widowhood had more pronounced effects for women than for men. For example, women’s household income, on average, fell by 41 percent with divorce, almost twice the size of the decline that men experienced, according to the GAO report.

Redstone Brokerage Services offers a free, confidential and no obligation consultation to all Redstone Federal Credit Union® members.  

Plan ahead and save your finances and your sanity.

The Balance Program2  provides Redstone Federal Credit Union members a comprehensive financial education and counseling service.   Call or email Balance advisors if you need help creating a new budget, understanding your credit report, setting up debt management plan, and much more.



Separation and Divorce: The Process 

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Divorcing couples may consider a "collaborative divorce," a new and highly effective divorce method where each party uses an attorney who has gone through specialized "collaborative law" training. With a collaborative divorce, all parties agree to work together in good faith to determine solutions that best meet the needs of the two parties. This process is generally less expensive and can be done without going to court. Take some time to select the right divorce attorney; you may want to interview several before deciding.

 

The Hidden Costs of Getting Divorced

There are several hidden costs to getting a divorce. Consider these:

  • Taxes.  If you keep the marital home, you could be liable for taxes after a divorce. Consult your tax professional.
  • Legal fees.  In addition to paying a retainer to your attorney, you may also be on the hook for other fees, such as expert witnesses, stenographers, appraisers, messenger services, postal expenses, or court costs.
  • Living expense.  Now that you have only one income, expect most day-to-day expenses to increase. Examples are rent/mortgage, childcare, transportation, counseling, lawncare, etc.
  • Lost wages.  Divorce can be distracting, taking time and focus away from work.

Use this helpful Divorce Financial Information Checklist to keep you organized during the process.

 

Divorce and Children

There are two types of custodies to be decided on by the courts, legal custody and physical custody. Legal custody is the right and responsibility of a parent to decide on such things as medical, educational, and religious issues. Physical custody of a child is providing shelter and day-to-day parenting. The decision on who gets physical custody does not necessarily determine who gets legal custody.

Parents should try and work together for the benefit of their children.  Remember, your child's welfare is your most important concern.

 

For more information, speak with a Trusted Advisor

Must be RFCU® member to obtain any product or service. Must be eligible for membership and open a share savings account to join RFCU. A minimum balance of $5 is required to open share savings account and must be maintained in share savings account at all times. Age and other restrictions may apply. Must be RFCU member to rent a safe deposit box. A lease agreement will be required for safe deposit box rental. The contents of a safe deposit box are NOT insured against loss by Redstone Federal Credit Union or NCUA. Safe deposit box availability is not guaranteed. Fees and other restrictions apply.   

1The Balance Program is offered to RFCU members through a partnership between RFCU and Balance. RFCU does not warrant, guarantee, or insure any product or service offered by BALANCE. RFCU and Balance are separate entities.

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