By: Kathy J. Bauers, ChFC
Ameriprise Financial

Couples who decide to divorce must deal with the daunting task of dismantling a life that was once a partnership. The emotional upheaval is intense, as both parties must create their own individual lives again.

But an important step in the divorce process is dividing the assets between the two parties. What was once ‘ours’ must now become ‘yours’ and ‘mine,’ and it’s a process that can be painful in its own right. If you are preparing for a divorce, there are important steps you need to take to ensure that the assets are divided properly.

Who should be involved
Let’s start with the obvious answer – lawyers.  It’s critical that lawyers are involved, especially when the individuals are in conflict. In addition, many people benefit from enlisting the help of a financial advisor who can help sort out the complexities of splitting joint assets.

Getting started
Sorting through the financial side of a divorce should happen right away. This is important because once the divorce is finalized, making changes to the financial settlement is extremely difficult. Here are some important initial steps:
1) Find out what your joint assets are. Any assets you’ve accumulated while married are joint assets, at least in most states. This includes the obvious – homes, autos, boats, jewelry – but also includes business interests, retirement savings, investments, cash, bank accounts, and anything of value like antiques. Make sure all asset values are
in writing.
2) Do the same with liabilities. Any debt including mortgages, car or boat loans, tax liabilities and/or penalties should be disclosed and tracked.
3) Create a new budget. Each party should determine their financial needs for their life after the divorce.  Don’t overlook items that were once shared like health or life insurance premiums. Use your best estimates if actual costs are unknown. This is an important step that will influence the way in which the assets are divided.
4) Explore what the long-term picture looks like. What will be your lifestyle beyond the divorce proceedings?  How will the divorce affect income?  Will the former stay-at-home spouse get a job? If so, what is the salary and benefits?  Where do child support and alimony fit into both individuals’ scenario? It is worth thinking about these issues now, even if the actual numbers are only estimates.

Your changing insurance needs
When couples split, each person’s insurance needs change immediately. Whether you carried the lion’s share of insurance policies, or you were the beneficiary of your spouse’s policies, you need to make changes.
• Health insurance. If you will no longer be covered by your spouse’s health insurance, you will need to find your own plan, either through an employer or another source. You will need to work out which of you will carry health insurance for your children as well.
• Life insurance. You may no longer want to list your former spouse as a beneficiary of a life insurance policy; on the other hand, if you were the beneficiary and will not be going forward, you will also need to explore your own life insurance needs.  Individuals who will be receiving alimony or child support payments might also consider taking out a life insurance policy on their former spouse to ensure they can continue to receive that money if the ex-spouse passes away.
• Other insurance needs. Long-term care and disability insurance may be more important to both parties, now that each is running a household solo.  Auto and home insurance will now be up to each individual as well, so be sure to find the right policy for your new situation.
• Other documents. You will also need to update key documents like wills and living wills. They can be rewritten or you can create entirely new ones that reflect both your wishes and the current state of your household.

Your financial know-how
If your spouse always handled the checkbook and the budget, you’ll need a crash course in the basics – and soon. Take a class in basic money management, work out a budget for your new life and (here’s the hard part) stick to it. As you embark on your own separate path, this is a skill you will need, and you won’t have anyone else to handle it for you.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.
© 2010 Ameriprise Financial, Inc. All rights reserved. File # 103655

Kathy Bauers, ChFC® is a financial advisor with Ameriprise Financial located at 3520 Silverside Road, Suite 27, Wilmington DE 19810.
For further information, or for an appointment please call (302) 543-5784 or email kathy.j.bauers@ampf.com.
For additional information about Kathy, please check out her website at www.ameripriseadvisors.com/kathy.j.bauers.

Testimonial:
“Turning my money over to a third party was a difficult decision. I’m single with a grown son and have always been tight-lipped about my finances. I had to trust that the person in charge of my money had my best interests in mind. That was and is Kathy Bauers. I’ve been with her for four years and do not know how I would have made it financially without her. She was my rock who offered great guidance.

In this depressed economy and a national distrust of finance people, I’m fortunate to have a wonderful relationship with my advisor, Kathy. It’s one less time-consuming task for me to do; she’s the expert and offers advice best suited for my situation. Thank you, Kathy.” ~Dianne K., Independent Contractor, Dallas, TX