Before escaping to Hawaii or reading all the self-help books friends have likely given you, here are eight financial moves to consider.
Breakups are never easy, but when a marriage or common-law relationship ends, it can be difficult to know how to take care of yourself financially while still processing the emotional side of the split.
1. Update Your Financial Accounts
Even if you don’t think your ex would take advantage of the situation, it might make sense to require dual signatories to take money out of joint accounts until you both agree what should happen to the funds. Be sure to change pin numbers on accounts that belong to you and redirect your paycheque to be deposited into your personal accounts. Make sure to also change the beneficiary on your registered accounts like RRSPs, TFSAs, and RRIFs. Once you know how the money will be divvied up, meet with your bank to change joint bank and investment accounts and transfer the money.
2. Assess Home Ownership
Maybe you get to keep the home you loved so much, or maybe you’re moving on to nicer digs. One way or another, you’ll likely have to sell your home to divide the proceeds or change the ownership title. Before you set in stone who gets to keep the home, meet with your mortgage provider to make sure whoever takes ownership qualifies to take over the loan. Then get a lawyer to take care of the title change and be sure to take the other spouse off the mortgage in a timely manner.
3. Deal with Debt
If you have joint debt, it can be critical to deal with it so it doesn’t come back to haunt you later. Decide together what you’ll do with the debt. Be sure to cancel joint credit cards and divvy up any remaining balance by transferring it to cards help by each of you separately. Try to pay off any joint loans or refinance or transfer that debt in one person’s name. Remove your Ex if they are an authorized user on any of your credit accounts. Double check your credit report to make sure you haven’t forgotten anything – like that department store credit card you applied for together years ago. You don’t want to be stuck paying for their new bedroom furniture and socks.
4. Update Your Insurance
Meet with your insurer or broker to make changes to your home, auto and life insurance policies. The good news? Removing an ex from your home or tenant insurance might save you money since you won’t be insuring their things anymore. Ditto if you had them as an additional driver on your auto insurance. If you were paying for any of these via automatic withdrawals from a joint account be sure to update your info. Also, make sure to change the beneficiary on your life insurance, and don’t forget to update any policies you have through your work.
5. Review Your Will
You wrote it when you had a very different future in mind, so it’s time to update your will to reflect your current reality. A divorce doesn’t invalidate your will, but it does remove your former spouse as an executor or beneficiary. If you don’t have a provision for whom your assets would go to after your spouse, then you may need to write a new one.
6. Change Passwords
If your ex had your passwords to your brokerage account, email or your Netflix account, make sure to change them. Even if you just signed in once using their devices, it may be safer to protect your information by creating new passwords.
7. Consult Your Network of Advisors
You want to make sure all the relevant financial professionals you work with know about your divorce. Depending on your situation, that might mean informing your financial advisor, your accountant, or your lawyer. They can help you anticipate any financial or tax consequences that might result from your divorce. Maybe you had to sell assets to divide up the proceeds or maybe you’ll owe more or less taxes next year. Tax or financial surprises are not the fun kind of surprises – so be prepared.
8. Update Emergency Contacts
The last thing you want is to have your ex called if you fall of the treadmill at the gym and pass out. Update your emergency contact info with your work, gym, doctors, and anywhere else that has your ex on file.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.