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Some not so minor details of divorce

On Behalf of | Aug 16, 2021 | Blog, Divorce |

While things may be highly emotional when going through a divorce in Texas, it’s important to keep your head up and be wise about your finances. As you are separating from your spouse, you will also need to separate your finances from theirs.

Separate your accounts

Any accounts you share with your spouse will have to be separated. Your house is probably the biggest asset you share, so you may want to sell it as you go through your divorce. There are important things to keep in mind: Are both of your names on the mortgage, or is only one of you named on it? If one of you decides to keep the house, you will have to ensure that only one name is on the mortgage. Whatever the case, you shouldn’t have your name removed until the new liability is released.

You will also want to separate yourself from joint bank or brokerage accounts. When you are going through a divorce, you should open individual accounts and close the joint ones. If you have an IRA or 401(k), you should change your beneficiary as you probably have your spouse listed. Do the same for your retirement account. If there is a transfer-on-death designation on any accounts, have that changed as well. If you and your ex share any credit card accounts, now is the time to cancel them.

Look at your insurance

If you’re keeping the marital home after your divorce, you should check your homeowners’ insurance. Your name should be on the policy, and you want to ensure that you don’t have more than you need in the policy. You could be paying higher premiums than you should be now that your spouse is gone.

The cost of your car insurance might increase after your divorce settlement. Often, insurers provide discounts to married couples.

You should immediately check your life insurance policy and change the beneficiary if it’s your ex. However, if you have children and they are named, you can leave things alone.

If your health insurance includes your ex or their coverage includes you, that will have to be changed. You will have to find new health insurance, which can be a financial burden unless you account for it during divorce negotiations.

Taxes and financial planning

Your taxes will be higher as married couples get more tax breaks than singles. You will also want to look into whether you or your spouse will receive tax deductions for last year’s payments toward the mortgage and property taxes.

Financial planning might be tricky, and you may have more expenses to pay after divorce. Your retirement income may also be smaller. You will have to find ways to balance your budget and plan for your children’s educational future.