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Your Finalized Divorce Isn’t Quite Finished. Take These Steps.

The Collin County Law Group April 1, 2019

If you have been involved in a divorce, it can be sweet relief when the process is over. The stress, the choices and the legal proceedings can be stressful and tiring. Now, you’ve got your whole life ahead of you.

There’s just a few more steps you should take to ensure your divorce agreement or decree works the way you expect. You need to protect your retirement and property, and just a few post-divorce tasks will do that. Take the time to settle these three issues:

Make Sure Your Retirement Account Division Will Go Through

If you divided a shared retirement account in your divorce, you should have been issued a court order called a qualified domestic relations order or QDRO. This is necessary for two reasons. First, if you move money out of a retirement account without a QDRO, the IRS may assess taxes and penalties. Second, your retirement account’s administrator may require a plan-compliant QDRO in order to make the division at all.

Now that your divorce is final, contact the plan administrator to ensure they have received the QDRO and that it complies with the plan’s rules. That way, you know that the division of your retirement accounts will go as expected. If there is a problem, contact your divorce attorney right away.

Update Your Beneficiary Designations

Your 401(k), 403(b), IRA or other retirement vehicles, along with any life insurance policies you may own, have designated beneficiaries. Your ex may still be the beneficiary, and that’s a problem. Since these accounts don’t go through probate, the designated beneficiary will receive the entire amount without any court to call a halt. You need to update your beneficiary designation so that your children, a charity or a trust is listed.

Reassess Your Retirement Savings Goals and Plans to Get There

Now that you’re on your own, you may find that you are either ahead of schedule or falling behind on retirement savings. Either way, there may be changes you want to make. Sit down with a financial planner that you trust and reassess your savings goals.

While you’re doing so, consider how your retirement assets are allocated. Your current allocation is based on retiring as a couple, for example, and may be too aggressive or too conservative for your new goals. Additionally, especially if your ex was in charge of investing, your asset allocation may reflect a different tolerance for risk than your own. Choose your asset allocation based on your own risk tolerance, your existing savings, and what you need to have to retire comfortably.

Once you have taken these relatively simple steps, you can safely say your divorce is in the past.