Navigating divorce while keeping finances straight

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GOLDEN VALLEY, Minn. -- Many people plan for retirement.  Few plan for divorce, yet the decisions you make during a divorce can have a major impact on your finances for the rest of your life.  It's important to keep a clear head, and get some help if your life is upended by divorce.

Financial Advisor Dan Ament with Morgan Stanley in Wayzata recommends you become a team player.  That is, assemble your own team of professional advisors to help you make informed decisions.  An attorney is an obvious choice, but also consider a financial advisor, an accountant and even a personal counselor if finances allow.

You will have to become a detective, tracking down your financial information.  Dan says that includes how much you've earned as a couple over the past five years.  Know how much and what debt you carry.  Track down all of your financial accounts - and understand how those accounts are allocated.  Do you own stocks? Bonds? Property? Cash? 

Take stock of your current living expenses, including rent or mortgage, utilities, etc.  How much does it cost to maintain your current lifestyle?  

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Critical to maintaining that lifestyle is understanding how your assets will be divided between you and your ex. There are a couple of different ways to go.  One is an equitable distribution approach, in which the goal is to find a fair division of assets.  You will have to determine what is marital property (assets acquired during the marriage) and what is individual property.  This would be assets given you to you solely prior to the marriage. A prenuptial agreement might involve other assets previously agreed upon, or you might have received an inheritance prior to your marriage.

Child support is huge whether you are the custodial parent or not.  A judge usually determines how much will be paid.  Take college expenses into consideration.

Spousal support can take many forms.  Temporary support is something decided upon before the divorce is finalized.  It is exactly that- temporary, meaning the final agreement can be different.

Rehabilitative support is support an ex-spouse will receive before that person becomes financially self-sufficient. 

Permanent support - just what it sounds like.  This kind of support is paid until the death of either former spouse, or until the person receiving support remarries.

Reimbursement might come into play if one spouse demands repayment of specific expenses he or she helped pay for during the marriage.

Dan says Social Security is another area where a former spouse may have benefits. You might be entitled to up to one-half of a former spouse's Social Security retirement benefits when you retire.  Your marriage has to have lasted more than ten years, and you have to be at least 62 years old, and not remarried.

Planning for your future after divorce is something you need to think about, too.  Assess your insurance needs.  Your will (if you already have one) will need to be reworked. 

Make sure you build a budget so you not only understand your expenses, but also have a means to reach your financial goals.

Additional Resources:

Morgan Stanley: Weathering divorce 

Morgan Stanley: Women in financial transition