When death or divorce touches you personally, it can be both an emotional and financial trauma. Thinking of your finances in the midst of grief and pain can be completely overwhelming, especially if your spouse always looked after such matters.
When I do" becomes "I don't."
Of the 50 percent of women who get divorced, only 28 percent will get any kind of ongoing financial support from their ex-husband. At the same time, a recent Gallup poll found that only 26 percent of women have a financial plan. So what's a woman to do?
- First off, separate your emotional state from your financial one. You will have a life after divorce, but it's up to you to make that happen.
- Get your divorce paperwork organized in one place, including your divorce decree and settlement papers. Make several copies of all important papers and keep the originals in a safe deposit box, while ensuring your lawyer has copies as well.
- Take control of your spending by figuring out just how much money you have to live on each month.
- Create a budget by writing down your expenses and find out where your money is going. Credit card bills and bank statements from past years are great guides.
- Don't be careless with money or turn over all your financial decisions to someone else. It's your life, your money and your responsibility.
Heirs to the throne
Success as a parent means taking care of your family. Success as a single parent means sticking to a budget. The grim fact of the matter is that women continue to earn less than men, and are even worse off financially after a divorce – the average woman's standard of living drops significantly in the first year of divorce, while the average man's rises. Another ugly statistic: over a third of women awarded support never see a penny of it!
After a divorce or death, children need to lower their expectations. Going from two incomes to one is a challenge. Children may have a hard time coping with all the changes, but with a little understanding and a lot of love, they'll come to accept their new life on a budget.
Till death do us part
If you're not prepared, the onslaught of paperwork that will hit after your spouse's death may seem overwhelming. Try the following:
- Get a handle on your assets by determining what you have to work with. Records of both your husband's and your own retirement plans, all insurance policies, bank and brokerage accounts and the deed to your house should be kept together in one safe location.
- Obtain your husband's death certificates and make several copies.
- Notify your husband's employer and file for any benefits owed to you, such as pension income, life insurance and health insurance coverage. The company's human resources department should be able to best direct you.
- Alert your husband's life insurance company and file a claim. Your insurance agent should have all the policy information and forms you'll need.
- Contact financial services providers so that joint accounts can be transferred to an account in your name.
- Update your insurance policies but don't make any hasty investing decisions concerning any lump-sum insurance or pension payouts. If possible, place any cash into liquid money market funds in case of unexpected cash outlays.
- Create a budget that works for you. You'll need to decide how to allocate your money and any payouts to satisfy your needs, as well as how to invest your money for retirement, for your children's education, and so on.
- Once all the major financial tasks are taken care of, take time for yourself. Don't be pressured into make big financial decisions when still you're trying to cope.
Your fairy godmother
And as soon as you feel up to it, you might also consider finding an advisor that can help you in the realms of:
- Cash management
- Education funding
- Risk management
- Retirement planning
- Tax planning
- Investment management
- Estate planning
- Special needs
John Exler is an Investment Advisor with RBC Dominion Securities Inc. This article is for information only. Consult with your professional advisor before taking any action.
john.exler@rbc.com
905-895-2949