Reaching the decision to divorce is usually an emotional process, but it also quickly becomes a meticulous financial process as well. Under Colorado’s “fair and equitable” division of marital property law, spouses may keep property and assets that belonged to them before the marriage and any that they inherited or received as gifts.
All the property, accounts, assets, and debts they accumulated during the marriage must be divided in a way that’s fair if not exactly 50/50. Divorcing spouses may negotiate a settlement agreement between themselves with the help of their lawyers, and have a low-conflict uncontested divorce, or they may take disputes to court for a judge to decide in a contested divorce.
Either way, the same economic pool of assets that once supported one household must now support two separate households. This requires an adjustment period during which both spouses must learn how to manage their changed finances. The following tips may help.
During the initial discovery process of the divorce, both spouses made full financial disclosures. This typically requires each spouse to produce all relevant financial documents. After divorcing, these documents are the best place to start in organizing your finances under your new, post-divorce circumstances. Essential documents to compile include the following:
Finally, if you and your spouse signed a prenuptial agreement, it’s important to have this document available to ensure that the terms of your divorce meet the specifications in the prenup as you move forward after the divorce.
One spouse often wishes to remain in the family home after a divorce. Under the fair division of assets law, the spouse who keeps the home often trades some assets to give the other spouse their share of the home’s value. Sometimes; however, a spouse realizes later that they can no longer afford the home—particularly if they owe more on the property than it’s worth in the current market.
It may be difficult to keep up the mortgage payments and pay for maintenance on only one income. Instead, other options include selling the home at a loss, renting it out, or for one spouse to remain in the home and pay rent to the other. One solution that’s growing in popularity is called “birdnesting.” In this arrangement, both spouses retain ownership of the home and also rent a small nearby apartment.
Instead of moving the children back and forth between two households, the children remain in the family home while each parent spends their custody days at home with the children and their non-custody days in the apartment, swapping places. Our proven Denver family lawyers can help you navigate any legal family matters after a divorce.
After the divorce, it’s essential for each spouse to open individual checking and savings accounts. After opening a new account, ensure that any direct deposits, such as your paycheck, are routed to the new account. Then, make certain that you’ve closed all joint accounts, carefully following any specified terms in your divorce decree for closing joint accounts.
If you are maintaining any of the joint accounts independently in accordance with the terms of your divorce decree, be sure to contact the bank to update the account’s ownership information, including your new name, if you’ve changed it, and new contact information. The bank will require a copy of your divorce decree before removing your ex-spouse’s name.
Once you know the full value of the assets assigned to you in the divorce, it’s important to make a new budget based on your income. Be wary of including any child support in your long-term financial plans since child support ends when the youngest child reaches the age of majority. For example, if you depend on child support in Colorado to pay your mortgage, you’ll have to consider how you’ll pay for it when child support ends.
Carefully look at your total income and expenditures and create a budget that accommodates your new financial situation.
When a judge assigns one spouse a marital debt but your name is still listed on an account, the creditor may still hold you responsible for the debt. It’s helpful to contact the creditor and present evidence that the debt now belongs solely to your spouse so they can remove your name. Unfortunately, the law does not compel a creditor to comply with the court’s decision on debt division so they may still hold you accountable for a debt that your spouse fails to pay with impacts on your credit rating.
It’s wonderful to prepare for retirement, but it’s easier to put a significant portion of your pay into your retirement when you pool finances with a spouse. It can be helpful to revisit your retirement contribution plan and temporarily keep more money for your monthly take-home pay.
If you haven’t begun a retirement plan because you assumed you’d share your spouse’s pension, it’s important to begin your own plan as soon as possible.
It’s crucial to address your will or estate plan after the divorce and update your plan, particularly if your spouse was listed as the executor of your estate or your primary beneficiary. Although Colorado automatically prohibits a spouse from inheriting their ex-spouse’s estate after divorce, without a new will, the state’s intestacy laws direct the inheritance of your estate, possibly in ways that you wouldn’t prefer or didn’t intend.
First, you’ll have to revoke your previous will and draft a new one listing new primary beneficiaries and a new executor if your spouse is listed as your representative. You’ll also have to update a trust if you have one, particularly a revocable living trust, to remove your spouse from their position as a trustee or beneficiary.
It’s also essential to update your health directive and power of attorney as soon as possible after a divorce to ensure that you have a new plan in place in case of a medical emergency.
Hiring a financial advisor after a divorce is a good way to ensure that you are moving forward after your divorce with a secure financial plan to accomplish your goals. A financial advisor reviews your assets and debts and helps organize a budget, retirement plan, and the new tax implications of your divorce.
Hiring a financial investor is especially important after a high-asset divorce. An advisor can help you manage your assets and investments and determine whether you have adequate insurance coverage for your new needs. They may also help you develop a new estate plan with the help of your attorney.
A financial advisor develops a complete post-divorce financial plan to ensure that you’re able to live under the best possible economic circumstances with a secure financial future.
The best way to move forward from divorce under the best possible circumstances is to hire our experienced divorce lawyers in Denver who will assertively defend your rights and safeguard your best interests during the divorce process so you retain the maximum assets allowable under Colorado divorce law. Call Ciancio Ciancio Brown, P.C. for experienced representation throughout your divorce.
