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Margie: If you’re going through a divorce, one of the biggest concerns for most is money. Jonathan Marks with The Marks Law Firm joining us this morning to talk about the six key money matters after your divorce. Good morning to you.
JM: Good morning, Margie.
Margie: This was kind of recently featured in the Forbes Magazine talking about this. So let’s go through the six things. And the first thing is talking about updating your beneficiary designations.
JM: By law, whoever you have designated as your spouse specifically under your will is no longer going to be able to receive those assets at the time you pass. So what you need to do is really be focusing on things that pass outside the will, so take a look at your IRA designation, your 401K designation, your life insurance policy and any account you would have that would transfer or pass on death.
Margie: All right. The second thing is to update your state documents.
JM: So just following up on that you need to take a look and re-do your will, re-do your trust, and then a lot of things that people forget about is you typically have powers of attorney that designate your spouse to make financial and healthcare decisions for you, should you be unable to do so. So you need to update those as well.
Margie: Next thing is to check your credit report.
JM: So, at the time of the divorce, everybody divides all their debt, but the reality of the situation is that some of this debt is joined so it’s still going to appear in the credit report. So really kind of focusing on your credit cards, making sure those joint cards have been closed, and if there is some form of a secured loan that you couldn’t refinance, you want to make sure that the lender is aware of the fact that no further charges can be made until that debt is satisfied, and the account can be closed at that time.
Margie: The next thing is review your tax withholdings and update those projections.
JM: Something you don’t think about very often at the end of the year is ‘what is my tax situation going to be?’ So you want to make sure that you take the time, go to your employer, update your withholding status, your exemptions, and then also if you’re going to be receiving spousal support, you want to make sure you do a quarterly tax deposit so you don’t end up with a big tax bill at the end of the year.
Margie: Next thing is compare earlier financial projections with reality, because that’s going to change.
JM: Absolutely. So when you’re going through the divorce, you’re going to be going through and taking a look at your incomes and your expenses with your attorney or a financial planner. Maybe every six months for the next couple of years you want to take a look at it and see if it actually became a reality. Most of the time it will, but if it doesn’t, it gives you the ability to take a breath and really try to reassess your financial situation to make some adjustments.
Margie: The next thing is to review your investment strategy.
JM: At the end of a divorce, you’re going to have a division of property. You’re going to get a whole bunch of stuff. But that stuff may not really meet your needs. So you want to sit down with a financial planner, assess whether your stuff in your portfolio makes sense for your actual financial situation, and if not, put together a portfolio that will meet your needs today as a single individual.
Margie: And some of these things, Jonathan, you can kind of do during the divorce process, but you’re going to actually be making the changes once it’s finalized, right?
JM: Typically what you’ll do is you’re going to go through different stages of the divorce, you’re going to be meeting with different individuals, whether it’s your attorney, an accountant, a financial planner. And as you go through those stages you’re going to start to think about these things but you may not execute on them until your divorce is actually complete.
Margie: All right. Family law attorney Jonathan Marks. Thank you so much we appreciate you being with us this morning.
JM: Thank you.