In our last post we focused on the importance of budgeting and cutting back on discretionary spending in order to save. While these aspects of financial planning are certainly important, those in Missouri who recently went through a divorce also need to make sure and handle all marital debts, as well as updating insurance and retirement plans.
In terms of marital debt, the first thing to keep in mind is that it is rather normal for a person to end up accumulating some debt after a divorce. Of course this is not ideal, but it is normal.
In looking at marital debt, typically the debt that is brought into a marriage by one spouse stays with that spouse after a divorce. However, any portion of the debt that increased due to joint decisions may end up being split in a divorce.
For those who end up with debt after a divorce, it is important to take an honest assessment of the situation and create a plan to pay down what is owed. The best course of action is to pay down the debt with the highest interest rate first, while also making minimum payments on other debts. Continue with this trend until the debt is all paid off.
Update all plans
Marital debt aside, many couples were also once named on each other’s insurance and retirement plans.
In terms of health insurance, the spouse who is going to be kicked off the plan should talk to their employer about insurance. Divorce is typically considered a major life event, which means an employee will normally be offered a 60-day window of opportunity to sign up for insurance. However, if this is not an option, look into purchasing COBRA through an ex-spouse’s place of employment. This will temporarily provide a continuation of coverage.
While figuring out health insurance options, also make sure to take an ex-spouse off of any other accounts. This means not only checking and savings accounts, but also retirement plans and estate plans. Basically, any legal documents where an ex could have a say in end of life or after life decisions should be changed.
Overall, while this time of a person’s life can surely be frustrating and confusing, know divorce is very common and that there are others in Missouri who are making the same tough decisions. An attorney with experience handling divorce cases in the state can also provide valuable tips and information regarding steps that need to be taken before, during and after a divorce.
Source: Fox Business, “Starting Your Financial Life Over After Divorce,” Andrea Murad, March 22, 2013
- Our firm handles property division in divorce, including marital debt division. To learn more, visit our St. Louis marital debt page.
