A divorce is one of the most traumatic experiences a human can go through. Few people can ever be fully prepared to deal with the feelings of grief, anger, and sadness that follow. Even worse, the financial impacts can be overwhelming, especially for a spouse who had not previously dealt with the family’s finances. And, when children are involved, the challenges are even more complicated.
Mike Rich, Certified Financial Planner™ with Pontchartrain Investment Management, offers the following advice to the newly-single person that might help pave the way to a financial plan that is designed to build financial security:
- Revise your will: Review your will immediately to make sure it reflects your new life situation and objectives. Other legal documents, such as powers of attorney and trusts, require attention, as well.
- Update beneficiary designations: Life insurance proceeds, retirement plan assets, and annuities will be paid to the persons who are listed as beneficiaries. For married people, beneficiaries are almost always spouses, so it is vitally important to deal with this as soon as possible to reflect the change in your life.
- Re-visit your life insurance and disability insurance coverage: This is especially important for a mom who might now find herself financially responsible for her minor children. Life insurance can provide long-term financial support for a family in the event of premature death. Likewise, without the income from a paycheck, life stops for most families. Therefore, disability insurance coverage is vital for protecting the income stream that comes from a job.
- Use cash from a property settlement with an eye on the long term: A large cash payment from an ex-spouse might seem like it will last forever, but that is rarely the case in many situations. Immediate financial needs deserve attention, of course, but long-term needs are just as important. College planning for children and cash flow planning for later life and retirement are on top of the list. Louisiana has an excellent 529 plan for college savings, and, even if the contributions to the plan are modest, they can add up over time. Likewise, annuities are powerful financial products that are designed for long-term income planning.
Divorce is traumatic, but it does not have to be a financial disaster. With careful planning and the guidance of an experienced advisor, the financial pain and uncertainty of a divorce can be softened. Mike Rich, CFP®, and the other advisors at Pontchartrain Investment Management can help. To find out more, call Mike at 985-605-5066.
Content in this article is for general information only and is not intended to provide specific advice or recommendations to any individual.