Provided by RBC Wealth Management and Rhett Neuman, CFP:
The unexpected death of a spouse or an unanticipated divorce could arguably be one of the most trying times in a person’s life. Along with a myriad of emotional and psychological adjustments, becoming “suddenly single” can bring about major changes in your long-term financial goals. The need to be cautious and careful in those first single months is imperative – your future has completely changed.
One of the most important things to be aware of is that you should proceed cautiously when making big financial decisions. Heightened emotions can cause you to make poor decisions. It is important that you take the time to review all your options, and remember in most cases you don’t need to make decisions immediately.
One of the first steps is to get organized. Death or divorce can leave you feeling scattered and confused. Gather your financial records and all other associated paperwork that will need your attention. A good list to start with includes:
- Joint tax returns
- Retirement account records
- Insurance policies
- Brokerage and bank account statements
- Trust documents and wills
Contact the person or company in charge of each of these documents and inform them of your new single status. You should also keep a file of all these documents and supporting papers for your records.
Once you have all these records, take the time to research them and make any changes, such as beneficiary designations for life insurance, retirement accounts and similar documents. You will also need to make the appropriate changes to your will. This is also a good time to review your insurance coverage and make the needed adjustments. Lastly, look over your investment plan to ensure your portfolio reflects your personal risk tolerance and financial objectives.
You should also carefully examine your budget, review your bills and take time to determine what it will take for you to live comfortably. Making a budget often shocks people when they find out how much they truly spend in a month – don't let your spending run rampant. If you find that you are overspending, prioritize your life.
Finally, you should also assemble a team of experts. There is no question that a divorce or the death of a spouse upsets your financial life and impacts your decision-making ability. Don’t be afraid to call on experts to help out. This isn't to say that you should avoid making any decisions, but your attorney, CPA and financial consultant can offer insight and expertise that may take some of the stress out of a trying situation.
This article is provided by Rhett Neuman, CPF, a Financial Advisor at RBC Wealth Management in Stillwater, MN, and was prepared by or in cooperation with RBC Wealth Management. The information included in this article is not intended to be used as the primary basis for making investment decisions nor should it be construed as a recommendation to buy or sell any specific security. RBC Wealth Management does not endorse this organization or publication. Consult your investment professional for additional information and guidance. RBC Wealth Management does not provide tax or legal advice.