How to navigate account splits, payment deadlines, and your new budget
Your J&D clarifies how your finances are divided. This article focuses on how to implement your new financial plan.
Chris Vatsaas, an attorney with Tuft, Lach, Jerabek & O’Connell, PLLC (Tuft Lach), understands why so many divorcees have trouble putting this new plan into action. “The time commitment sometimes catches clients off guard because in their head they just got done with this really time-intensive, high-stress process by settling or having a litigated outcome,” he shares. “And now there’s still a little bit more to do.”
The Most Critical Deadlines
Before you get started, it’s important to identify what absolutely can’t be missed.
“Payment deadlines would be the most common culprit,” explains Vatsaas. “From a tangible financial impact perspective or risk, the deadlines related to payment or transfer obligations would probably be the most critical piece.”
Refinancing is another crucial point. Your divorce decree may grant you up to 90 days, but refinancing sooner is always better.
“If you wait for 60 of those 90 days, now you have a problem,” says Vatsaas.
Lastly, many divorce decrees allow 30 days to make retirement account transfers. That’s a tight deadline, so you should get started as soon as possible.
The Real Cost of Delays
Once your divorce is finalized, you might have some trouble motivating yourself to take the next steps. That’s understandable, but remember that delays have real (and often serious) consequences, such as:
- Increased stress
- Additional attorney fees for remedying problems
- Possible contempt proceedings if you don’t make payments
- Claims for attorney fees from your ex-spouse
“Delays bring more cost and stress,” says Vatsaas. “Everyone spends more, and everyone incurs more stress when they’re trying to just get done with that.”
Understanding Your New Budget
Even when you factor in support payments, two homes cost more than one. Many divorcees find that their financial goals need some adjustment.
“A budgeting perspective is important for other financial goals or hopes you might have for yourself, because the calculus on those goals has changed in some fashion,” explains Vatsaas, who suggests starting by identifying nonnegotiables versus nice-to-haves.
Budgeting is a crucial part of financial planning for divorcees, and this is an area where the help of a financial advisor can be indispensable. Laurel Wealth Planning helps new divorcees:
- Understand their new cash flow
- Build a realistic post-divorce budget
- Determine how best to meet as many goals as possible
With Laurel Wealth Planning, you can create action timelines so your financial planning strategy unfolds in alignment with your goals.
Educate Yourself on Your Assets
Many divorcees don’t fully understand their assets. If that describes you, now is a great time to get more familiar.
Vatsaas says, “A very easy starting point is reviewing your employee benefits handbook. A lot of education can be obtained that you didn’t realize was sitting right there.”
You should also take the time to understand your 401(k), IRA, HSA, and other accounts. When you know what you can and cannot do with each account, planning is much easier.
Vatsaas also cautions divorcees to avoid confusing sentimental attachment with practical value. Many divorcees do this with homes, pensions, and other significant assets.
If your ex-spouse handled your finances, this phase of the process may be confusing. Laurel Wealth Planning can help bridge this knowledge gap by explaining investments and financial strategies in accessible language.
Divorcees Should Think in Increments, Not Years
Divorcees who feel overwhelmed by the post-divorce financial transition should take a deep breath and focus on the immediate next steps.
“If you can think about it in terms of what’s on your two-week checklist, what’s on your 30-day, what’s on your 45-day, and then revisit it every couple weeks, it’s a lot more manageable,” recommends Vatsaas. “Each one of those increments gets a little bit better.”
In our third part of this series, we will cover everyday life transitions, including subscriptions, insurance, name changes, and emotional well-being.
If you’ve recently gone through a divorce, Tuft Lach can offer legal guidance. Laurel Wealth Planning LLC may be able to guide you through these next critical financial steps.
To schedule a complimentary meeting, email laurel.wealthplanning@laurelwealthplanning.com, get in touch online, or call (952) 854-6250. Find out if the Laurel Wealth Planning team is the right financial advisor for you based on your wants and needs.
Frequently Asked Questions
What financial deadlines should divorcees prioritize in the first 90 days after divorce?
The first 90 days after divorce often include several important financial deadlines. These may involve making required payments outlined in the judgment and decree, transferring retirement accounts, and refinancing shared debt such as a mortgage. Addressing these items quickly helps prevent legal complications, additional attorney fees, or financial penalties that can arise if obligations are missed.
Why is budgeting especially important for divorcees after separating finances?
After a divorce, many people find their financial reality has changed significantly because maintaining two households typically costs more than maintaining one. Creating a new budget helps you understand your updated cash flow, identify essential expenses, and determine which discretionary costs may need to be reduced. For many divorcees, this step becomes the foundation for rebuilding long-term financial stability.
How can divorcees better understand the assets they receive in a settlement?
Many divorcees inherit financial accounts or benefits they may not have managed before, such as retirement plans, investment accounts, or employee benefits. Taking time to review account statements, benefits handbooks, and plan rules can help you understand how these assets work and how they fit into your financial future. Working with a financial advisor like the team at Laurel Wealth Planning in Edina, Minnesota, can help divorcees gain clarity about their accounts and build a practical financial plan for the next chapter of life.
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