Divorce is definitely never going to be an easy process. Planning for it takes a lot of emotional strength and stamina. There are certainly ways one can protect him or herself from the financial impacts of a divorce if time is available. However, few folks have the foresight and the time to make these types of moves, which could require years of advanced planning. However, there are some moves one can make prior to filing that do not take a lot of time and may allow a better night’s sleep during the process.
- Change your beneficiaries on insurance and retirement plans. You may never have selected beneficiaries or your current spouse may be the beneficiary. Either of these is no good if you die before the divorce is final. You may not be able to make these changes once you file so before filing is the time to do it. Florida, and other states, do provide some protection once you have filed, it is not complete nor is it guaranteed. Pick another family member as the beneficiary. And if you have kids that are minors, remember, unless you do some other planning, your spouse will have access to that money until the kids are over 18.
- While you are at it, change (or if you don’t have one, write) your will! If your spouse is your personal representative, change that part of your will at a minimum (as mentioned earlier, there are laws that may cause that change but those laws are imperfect and you should choose the personal representative while you have the chance). If you have minor children, you may want to provide that their money goes into a trust, and that someone other than your spouse is the trustee. Furthermore, even though you cannot disinherit your spouse in most states (that’s right, if you die your spouse is getting a share of your estate) you can provide for a trust that holds his or her share in your will – better than nothing!
- Remove your spouse as a healthcare surrogate so he or she does not have access to your medical information. Also, change any powers of attorney in such spouse’s favor. Again, the law may step in to help this, but better safe than sorry, especially when it comes to your medical information.
- Remove your spouse as a signer an any accounts that you own individually. This prevents that spouse from getting access to your individual accounts. This does not mean jointly titled accounts, and it does not mean that your spouse may never get the value of those accounts, it just means that for the time being, that money cannot be taken right after you file for divorce.
- Title is important, so review title to all of your property. Just like accounts, you may have companies, real estate and other assets that are titled in your name. You should take stock of these assets and understand what immediate effect filing for divorce may have on your ownership. For instance, some company shareholder or operating agreements may cause a buy out of your interests upon filing – you should be ready to deal with the side effects of filing.
These actions will give you some peace of mind that you have provided the most protection for yourself and your children if something should happen to you before your divorce is finalized. Many people are unaware that upon death, in most states, without a will, a spouse gets everything in your name, even in the middle of a divorce. Filing does not change that. And while you cannot prevent everything from going to a spouse, you can at least reduce that impact and protect your assets by taking these steps.