Divorce can change a lot about a person’s life, especially during the immediate transition out of the marriage. People typically move, shift to a co-parenting or visitation arrangement, and reassess their living expenses.
On a broader level, divorce can also affect a spouse’s financial security and goals. For this reason, it is important to understand how your immediate decisions during your divorce can have long-term impacts on you financially.
Saving for your child’s college tuition
Parents who want to (and can) pay for some or all of a child’s tuition should address this in a divorce settlement. Discuss how much each parent will contribute, and consider establishing limits like how long you will pay or a maximum amount you will pay. As noted in this CNBC article, parents can also address 529 plans, if one is in place. No matter what plans you have regarding college tuition, be honest and realistic about contributions.
In some divorce cases, one spouse may be able to retain all of their retirement accounts as their separate property. In other cases, they may be required to distribute a portion of their plan to the other spouse. It will be important to consult with an attorney to understand how much value you might be required to offer so that you can plan how to recover that money through future investments.
Divorce is a crucial time to update any estate planning documents you have. At the conclusion of your divorce, you can reassign beneficiaries, change appointments and adjust any terms to reflect updated wishes and financial circumstances. Failing to do this could lead to confusion or distributions contrary to your wishes at the time of your death or incapacitation.
Balancing immediate needs with long-term goals
There are many things to consider during a divorce, and it can be easy to lose sight of the fact that there is life after this difficult event. To protect your future interests, you should enlist an attorney to help decide how to balance your immediate needs with your long-term goals.