Taking Control of Your Family’s Finances
When faced with the responsibility of managing your family finances for the first time, it can feel overwhelming when it isn’t something you were deeply involved in before. When this duty follows a divorce, the emotion of the situation can take over and lead to a feeling of helplessness, especially if your spouse had managed the family finances. In most cases this leads to inaction, further creating stress around the situation. It’s not that you can’t handle it, you can! But you will need a guide and the encouragement to tackle it at your own pace, and that is what this tool is for.
No one should assume that they can fully understand how you are feeling, as your experience and emotions are uniquely yours. You can find support, but you will have to search out an advisor that you trust will work with you and in your best interest. An advisor’s role in this situation should be to support you when needed, advocate for you when required, and “do” for you when asked. They should be someone to provide the know-how when you are ready to take action, with their goal being to help reduce the anxiety that comes with you not knowing where to start.
https://www.parentingspecialneeds.org/article/financial-planning-for-those-who-are-at-the-starting-line/
With some support and a little direction you can take control of your family’s financial future. To move forward it is important to know what all you will need to address. The best way to track your progress is to operate with a thorough checklist. Some of the tasks below will apply to your family, others may not. Some may be time sensitive, others will prove not to be urgent. Use the seven stages provided below to help navigate your way with your trusted advisor. This can serve as a tool to prioritize where to start, and help you successfully work through the process without missing any important steps along the way
STAGE 1:
Begin to Organize Your Financial Information
Before you can move forward with planning, you first need to confirm the location of important documents. Start by gathering the following documents, and then create a filing system that organizes them in a way that is intuitive to you.
A copy of the most recent years tax return (these should have been reviewed by an attorney during proceedings)
All Insurance policies, especially those required by to be maintained in the QDRO (qualified domestic relation order)
- Titles to autos and other personal property
- Health insurance & other benefit information for the kids
- Copy of all legal documents, including any will or trust documents
- Location of safe deposit box if there is one, with a list of contents
- Any business interest or royalties you maintained following the divorce
- Memberships, time shares or deeds, country club rights, private clubs, etc.
https://www.parentingspecialneeds.org/article/drowning-in-paperwork-heres-what-helps-us/
STAGE 2:
Create Your Cash Management Plan & Budget.
The regular inflow of income and outflow to cover expenses starts new, so develop a plan that works for you. Start by creating the accounts you’ll need to maintain going forward, design a budget that fits your needs and consider any tools you might need to manage this going forward.
- Banking
- Open new cash accounts in your name
- Checking/savings/money markets
- Credit accounts if needed
- Close joint accounts (and if any are to be maintained by the QDRO, consider suspending future credit charges)
- Budget
- Review monthly income and expenses
- Determine emergency reserves (rainy day fund), including how much is needed and where the funds will be held
- System
- Consider budget software (to at least track expenses)
- This come from your advisor or tax professional, or you’ll find a number of websites and apps that can help
STAGE 3:
Review and Update Your Insurance & Related Benefits.
Take account of all insurance policies you held previously, maintaining those needed and adjusting where necessary. And don’t forget to review benefits available through your employer.
- Review/update insurance & benefits
- Social security
- Property/Homeowners Insurance
- Auto Insurance
- Life
- Health
- Beneficiary Designations
- When you have the coverage and protection in place that your family needs, be sure to confirm that all beneficiary designations are in order.
STAGE 4:
Review Assets & Liabilities.
Create a family net worth statement and balance sheet to account for assets, then proceeding to analyzing and making adjustments where needed.
- Review division of Assets, follow through on QDRO or agreements, retitling assets where needed
- Retirement plans
- Investment accounts – stocks, bonds, mutual funds, CD’s
- Real estate
- Personal property – furnishings, jewelry, etc.
- Review ownership of any custodial accounts
- Analyze investments
- Ensure access to necessary cash
- Work with an advisor to review investment allocation due to new circumstance
- Liabilities/Loans
- Confirm any debts to be maintained by you
- Close any unnecessary joint credit cards or lines of credit
STAGE 5:
Update Your Estate Plan.
Make sure that any previous legal work (wills, trusts) are replaced with new documents outlining your wishes.
- Update your estate plan by:
- Updating beneficiary or transfer-on-death designations
- Create new legal work: will, trust(s), power of attorney, living
will/health care directive
STAGE 6:
Long-term planning.
Create the new forward looking plan based on your goals and desires.
- Create a new retirement plan, including your new savings strategy
- Develop plan for home or other real estate
- Determine how long you’ll maintain your current home
- Schedule a mortgage review to ensure the mortgage suits your needs
- Is there a buyout that needs to be processed now or at a future date?
- Taxes
- Prepare for current year taxes to avoid surprises
- Who will file future returns and provide ongoing tax guidance?
https://www.parentingspecialneeds.org/article/creating-financial-special-needs-plan/
STAGE 7:
Misc.
- Understand any existing or future rights under social security
(including spousal benefits) - Passwords – Do you need to update any passwords for old accounts, restrict joint access points, etc.?
- Check credit report to make sure it is in order and all has been
separated, there no errors, etc. - Determine how you’ll confirm any insurance or benefits required to be maintained for you by your exspouse are in fact maintained
Additional Special Needs Considerations
- If you created legal documents while married, including a special needs trust for the benefit of your child, complete a review with an estate planning attorney to determine how they might need to be altered.
- If one parent is currently listed as the contact for various
resources or benefits, such as representative payee for social
security benefits, ensure that the other parent has the ability to access these resources when needed under joint custody or supervision. - Determine how guardianship will be handled, or if your child is under the age of 18 what the plan is to address guardianship at that time.
- Ensure that special needs planning done by one parent to protect ongoing access to social security and Medicaid is not undermined by the other parent failing to complete similar planning.
https://www.parentingspecialneeds.org/article/building-resource-manual/
https://www.parentingspecialneeds.org/article/what-do-you-do-when-financial-hardships-hit/
https://www.parentingspecialneeds.org/article/how-to-handle-money-and-your-finances-in-2021/
Helpful Articles
- How to Handle Money and Your Finances in 2021 [1]
- Simple Ideas to Help You When You Face Financial Hardships [2]
- What Do You Do When Financial Hardships Hit [3]
- Financial Planning: For Those Who Are at the Starting Line [4]
- 9 Things You Need to Know to Maximize Your Child’s Benefits [5]
- Social Security Benefits: Understanding How To Work? [6]
- Does Your Child Qualify for Supplemental Security Income? Dispelling Misconceptions [7]
- Special Needs Planning: What is a Special Needs Trust? [8]
- Able Accounts and Taxes: What Special Needs Families Need to Know [9]
- What the Federal Tax Overhaul Means for Families with Special Needs [10]
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This post originally appeared on our January/February 2016 Magazine [24]