Post-divorce finances: A primer

By divorce360.com

Divorce affects the finances of each former spouse. In many cases, both parties will have to make lifestyle changes; in some, those changes will be dramatic.

If you are a divorced spouse who must deal with a lower standard of living, rebuilding your financial life is important. Here are some steps that can help:

Create a financial plan

Much of the financial information regarding your expenses, child-care needs, your income and other assets was collected for use during the divorce process. Look at those costs, factor in any child and spousal support, and adjust accordingly to reflect your single status. Don't forget your health-care and insurance costs, and those of your children if they are not covered under the noncustodial parent's policy.

• Talk back: How has divorce affected your finances?

The key is to be realistic and not to make rash fiscal moves as you settle into your new situation. Once your financial plan and everyday budget are established, follow them.

Separate your finances

Make sure all joint credit card accounts have been closed. Open accounts in your name so you can begin building a separate credit history as soon as possible.

Change the title on your home and record the change with the mortgage company. Change the name on the utility bills to reflect who is now responsible. Change the registration and titles on vehicles. Update wills and beneficiary information.

Close joint safety deposit or post office boxes, and open new ones if needed. Put a certified copy of your divorce decree in your new safety deposit box.

Inspect your insurance

Obtain all necessary insurance to protect yourself and your property now that you are on your own. This includes health, life, auto and homeowners or renters insurance. Notify others of a new name.

If the divorce decree provided for a name change, get a new Social Security card, driver's license, passport and credit cards. Notify your bank, investment account manager, all credit accounts, personal lawyer and accountant of the change.

To change your name with the Social Security Administration, file Form SS-5 (.pdf file) at a local agency office. It usually takes two weeks to have the change verified.

Get your credit reports

You'll also want to notify the three major credit bureaus -- Equifax, Experian and TransUnion -- of your name change and, at the same time, get a copy of your credit reports.

Federal law allows you one free report from each bureau each year. Review the reports to ensure that any closed accounts are noted as such and that any other updates have been made in the credit agency file.

These sites will help:

• Credit-report request service

• Equifax

• Experian

• TransUnion

Review retirement plans

If there was a division of a pension, 401(k) plan or individual retirement account, confirm that a qualified domestic relations order has been submitted to the fund administrator and implemented correctly. Also make sure that as recipient of the distributions, you have established an account for the funds to be transferred to.

If you were married for at least 10 years, you are entitled to make a claim against your former spouse's Social Security when you are eligible for the benefit. Check with the Social Security Administration for details. (See "Social Security for the divorced.")

Audit yourself

Speak with your accountant or personal attorney about potential tax ramifications of your divorce. Make sure all joint tax responsibilities from your marriage are filed.

This article was reported and written by Kay Bell for divorce360.com.

Updated May 26, 2009