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Women, Divorce, and Smart Financial Decisions

6/27/2012, 1:34 p.m.

Divorce and its financial challenges are an issue almost no woman wants to face. After all, during divorce proceedings, not only is a woman considering the financial future of herself and her family, but she's also dealing with the emotional aftermath of the dissolution of a marriage. It can be a difficult time for everyone involved, and a messy financial situation will only make things worse.

Unfortunately, no matter how mutual or cut-and-dry the legal proceedings of a divorce are, there are complications when it comes to short-term and long-term finances. The best thing women can do to prepare themselves is to take financial issues one step at a time, working with an advisor they trust to help them start looking ahead to a brighter future.

After Divorce: The First Steps

Once everything has been divided up, it is necessary to re-title or transfer all of the "big ticket" items, including property, houses, cars, wills, insurance, credit cards, and bank accounts. It's important to get these things out of the way first, since you don't want to be held liable for any delinquent payments or unaccounted spending on behalf of your ex-spouse. The same is true for any issues related to bankruptcy; if there is a chance of either partner filing, it's important to do it either before the divorce occurs or very soon thereafter. That's because it is possible for one ex-spouse's bankruptcy to affect the other's financial situation, since he or she may be held liable for defaulted loans.

Along these same lines, it's important to amend existing retirement plans, including IRAs and 401(k) accounts. When possible, these should be a part of the divorce settlement, since they incorporate a very large portion (if not all) of your financial future as far as retirement goes.

After Divorce: Looking Ahead

Getting your finances settled after a divorce can take years. Not only are most women adjusting to a new home and new income, but many of them are also figuring out how to balance work and child care, as well. This means that you may not consider yourself ready to start planning a savings and retirement plan until five or ten years have gone by and you are on your feet, so to speak.

This is a mistake. Although you might not have the funds ready to start investing right away, it's always best to at least meet with a financial advisor who can help you determine your goals and next steps. Whether you want to set a retirement plan into action or find a way to build a savings account that will give you - and your newly emerged family - some freedom from financial worries, it's always best to start right away.

Although there are rarely very many silver linings to a divorce, it does give many women a chance to start taking proactive control over their future. Sure, it may take a few years before you start to feel settled enough to really tackle stocks, bonds, risk assessments, and portfolio diversification, but divorced women are among those best suited for smart financial decisions - if only because they're being forced to ask the hard questions and take a good look at what they want out of their lives.

Questions? Email me at wesley@thewandwgroup.com and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.