Financial Advice When Going Through a Divorce

Navigating Finances with Divorce

If you find yourself or someone you know going through a divorce, it’s important to be able to navigate the financial aspect of this unpleasant life stage. At Dominion Energy Credit Union, we are here to help you every step away – through the good times and the bad. Use this financial advice to help you budget during the divorce process and beyond.

Divorce Checklist

Divorcing your spouse is not only an emotional strain but is also quite expensive. There are a lot of moving parts involved and the divorce process can be overwhelming. It’s important to understand how to manage divorce finances during this process to make divorce planning a little easier. Dominion Energy Credit Union has provided a helpful checklist to review financial essentials when going through a divorce. As with all financial advice, please consult a certified financial consultant, as well as your divorce attorney for legal-related matters.

1. Check Your Credit

Make sure when going through a divorce to get a copy of your credit report and update it now that you are single. In addition, once your divorce is final, remove all accounts that were in your former spouse’s name, so it no longer influences your credit score. Also, if all your accounts were merged with your former spouse, make sure to apply for a credit card and open accounts under your name only so you can begin to establish your own credit and loan history. Dominion Energy Credit Union offers checking accounts, savings accounts, money market accounts, savings certificates and more to make this process convenient. Check out our switch kit for more account and loan details.

2. Update Your Accounts

After a divorce, it is important to understand that you are still responsible for paying existing balances that you have under your name. If there are any changes that you need to make, do so as soon as possible so you don’t wind up paying for any of your former spouse’s balance. Click here for the process to change the name on and update your Dominion Energy Credit Union account.

3. Reviewing Your Insurance Coverage

Insurance policies are another important thing to review when going through a divorce. If you were covered by your former spouse’s health insurance plan, you will have to secure your own health insurance coverage, understand coverage through the Affordable Care Act (aka Obamacare), or you may be eligible for COBRA coverage. COBRA benefits continue coverage to those who would otherwise lose their benefits due to a circumstance, but this option can be costly. On the other hand, if your former spouse was on your health insurance plan, you are going to want to make sure to update that to have it removed once they have confirmed their own coverage plans. You will also want to look at other types of insurance plans that may be impacted by your divorce, such as life insurance.

4. What To Know During A Tax Season

Now that you are no longer married, you are no longer filing jointly as a couple. The IRS will consider you unmarried for the entire year if your divorce is final by December 31 of the tax-filing year. If you are transitioning into a single or head of household filing or if you have children, there are numerous tax implications. Please consult a tax professional to discuss your specific situation.

5. Retirement Planning

Retirement planning is another extremely important consideration in the divorce process. Did you know that if your former spouse had an employer-sponsored retirement plan during your marriage, you are legally entitled to a portion of those funds? To have better control over this going in your favor, you can look into a qualified domestic relations order. Not only will this assist you with your beneficiaries, like child support, but it will also help give you rights to your spouse’s pension plan. Explore financial resources to help you enjoy your retirement.

Budgeting While Going Through a Divorce

After a divorce, it may seem unclear how to adjust your budget when you were used to your previous financial situation and the same re-occurring expenses. Dominion Energy Credit Union has provided you with some important budgeting tips on how to handle this new stage in your life, while keeping in mind the average cost of divorce.

1. Contribute to Savings

Many divorces result in additional expenses that weren’t previously in the budget, and as a result, many people are confused how to budget after a divorce. It’s extremely important to keep your longer-term financial priorities the same. You should continue contributing to your retirement and emergency funds. Savings accounts, money market accounts and savings certificates from Dominion Energy Credit Union can help increase your savings. Even if the amount you contribute decreases in the short-term, it is critical to continue doing so in order to remain on track with your longer-term budget and life goals.

2. New Expenses

With a divorce also comes new expenses that need to be accounted for when creating a budget plan. However, there are a few things to note about existing and future expenses. For example, both of you are still responsible for any debt that was brought into your marriage and incurred after separation. Divorce also gives you the opportunity to adjust your personal financial priorities. Perhaps now it’s time to downsize to a smaller house or drop the Hulu account your spouse might have used more than you. Find simple ways to adjust to your new financial situation and be more financially savvy with your new life.

Your divorce attorney will assist with how you and your former spouse should split your assets, debts, and child support (if applicable). As part of this process, it’s wise to keep record of your spending habits over the past couple of years. Look at your household bills, food, clothes, entertainment, utilities, child care, etc. This way you have a clear understanding of what is expected of you financially during this time and how you might budget in your newly single life.

Going through a divorce is of course difficult, but with some planning during the process, you can make sure that you feel secure with your financial priorities. Contact us to see how we can help. We specialize in financial services and have served Dominion Energy employees and their families throughout Virginia for over 80 years.