Taking Care of Urgent Items

Make sure you have some emergency cash. After divorce, you may be facing unexpected expenses for a period of time until your financial situation settles down and you have a clearer picture of your future needs.

Don't use your savings as a source of funds right now. Understand the implications of selling any assets to get needed cash. Consider any capital gains or additional income tax payable or fees that you may incur.

Review the various tax implications of now filing your tax return as "separated" or "divorced". You may be entitled to certain claims or deductions. Understand the tax impact of paying or receiving spousal support. Speak to your accountant so there are no surprises come tax time.

Review and deal with any debt that you may have accumulated while working towards your settlement agreement. You may consider refinancing your home and benefit from a home equity loan versus traditional mortgage to lower payments in order to manage better cash flow.

Update all passwords on all accounts you access online such as banking, investment accounts, pension and benefit plans, etc. Review all preauthorized withdrawals to confirm new arrangements or confirm any previous ones have been stopped.

Check your Credit Card ownership. A credit card account could actually be joint even though only one spouse's name is shown on the statement. Your credit card company does not recognize that your divorce agreement relieves you of either current or future responsibility on a certain account. The safest action is for you and your spouse to close all accounts and open entirely new accounts.

Review all your benefit plans, life insurance, registered plans that you have to confirm beneficiary designations. You need to change some so that they no longer pay to your ex-spouse. You may have to adjust others to meet the requirements of your separation agreement.

Revise all your estate planning documents, such as your will, power of attorney, and power of attorney for personal care. Most estate planning documents do not survive a divorce very well or at all. Likely, after a divorce, you'll have even more concern about who would control your assets after your death.

Review your investments with your advisor. Let them know all about your new situation and determine if your investment strategies need to change. You may have to adjust the level of risk you want or need to take on.

Review your home insurance. Here's a great opportunity to meet your agent face to face if you've never dealt with them in the past and determine if you want to continue working with them. Confirm such items as do they have your correct address, when is the premium due, how is it paid, is your deductible at an appropriate level, do you have "replacement cost coverage. Review any additional riders for personal items you may no longer own.

Review your auto insurance. Look at details regarding other drivers (is it necessary to have children listed as occasional drivers on both your car and your ex spouses car) You may want to increase the deductible to save on premium payments

Determine what you do if you become sick and can't work for a period of time. If you have disability insurance,you may want to decrease the waiting period before benefits begin. May add additional costs but be worth it to reduce the risk of how you'll manage financially if you couldn't work. Consider critical illness insurance coverage which provides additional cash.

Arrange to remove the "spousal designation" on an RRSP. If you own a Spousal RRSP you can consolidate that plan into your own personal RRSP plan. It makes things simpler to track and reduces the number of statements you'll receive.

Start saving no matter what to get yourself back on track... Sit down with your financial advisor to review and revise your financial plan. If you don't have a plan, now is the time to put one together.

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