So the ink is finally drying on the divorce settlement. You’re shattered – emotionally, physically, mentally. And you are starting to settle into your new life, the new status quo of visitation schedules and bills. Following on from our previous article on negotiating a divorce settlement, this article looks at how you move forward financially.
Whilst I absolutely appreciate the strain of a divorce, and the desire to firmly close the door on that chapter, there are a few really important things you need to take care of.
5 tips to post divorce settlement money
- Finish the asset transfer. I can’t tell you how often i’m helping a client 10 years later deal with the complexity of issues that result from not completing the asset transfers. I know that after a brutally exhausting set of negotiations and admin, the last thing you want to do is go through more admin and interactions with your ex. But you need to. There are two major ones I see:
- Property – when the deeds haven’t been transferred and now your ex holds the cards to your new dream home because they won’t sign the transfer papers on your old home. Or you’re unable to do the renovation you need because they are going through a tough financial situation and can’t settle the outstanding debt on the mortgage in order to transfer the home into your name so you can get a building loan.
- Retirement funds – when the divorce contract has an amount they need to give you, and 20 years later they eventually give you that amount… no growth.
- Change your will and life insurance beneficiaries. Most people’s will and beneficiaries are their spouses, who are now their exes. And when they die, all the money then goes to this person you no longer are fond of. And it happens. South African law gives you 3 months to change it – if you die in that period, the court assumes you do not want to leave to your ex. But thereafter, they will assume that it’s valid that you’re leaving it to your ex and his new wife. Crucially important is that you agree with your ex who your children will go to if both of you pass away… otherwise the last living spouse gets to decide.
- Draw up a new budget and be strict about sticking to it for the first 3 months so that you get a feel for the new normal. It will be like anything new – it’ll take time to adjust on not swiping that card without thinking. Be open and honest with your children about what it will take and how each of you will need to cut back. Make sure you have debit orders set up to automatically pay your new bills. Stop payments for things that are his to pay now.
- Understand what it will take to save for retirement. You need to get on top of retirement saving – especially if your ex took care of the investments. I know many divorcees that took the first year to adjust to the new way of being, which is totally understandable. They had every intention of starting to contribute to their retirement funds after that. And five years later still haven’t started. But have grown into their increasing incomes with new cars, new houses or more holidays. Not more retirement savings. I get how boring it is to save. But no one will look after you in retirement except yourself. If you can’t hold yourself accountable for it, get an accountability partner to make sure you get there. And a solid plan from a trustworthy financial adviser
- You may not be able to keep up with your ex’s spending. So when he’s buying things for your children or taking them on fancy holidays, you may not be able to keep up with that. And don’t feel the guilt to. I’ve learnt each person’s finances are very different, even you both earn the same. I know of a man who spoilt his kids rotten after the divorce. They’re now needing to support him financially in retirement. Children are very able to understand there are 2 different ways of being – your way and his. And whilst they may try use it against you whilst they’re young and terrible teenagers, time is the most perfect leveler.
Learn to deal with your money. Learn about money. You may never have had to deal with it – but that doesn’t mean it’s too late to start. It’s unfortuneately not one of those optional extras you can opt out of. It requires you to step up and learn.
Other helpful articles
- Life Insurance and wills – articles
- Life Insurance and wills – podcast
- Previous article on divorce and money – negotiating the settlement
- Podcast Interview on divorce with retired judge, Linda Schoonover