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What to do before your divorce is final

A divorce is final — so here are factors you should consider before the papers are signed.

If at all possible, calmly exchange ideas with your spouse on how marital property should be divided prior to bringing in the lawyers. Remember that your separate property is not on the table. Separate property includes assets you owned prior to the marriage, as well as gifts and inheritances.

Unfortunately, however, when money is comingled with marital funds, the separation can become problematic, as a practical matter.

What about the house?

The marital dwelling is particularly problematic. Whoever is to get the house should decide what to do—sell it or keep it. Many of us have an emotional attachment to our homes, especially divorcing parents with children still living there. But the hard reality may be that it will be impossible to afford to stay.

If that's going to be the case, better to recognize and plan for it now than later. Keep in mind, too, that upon the sale of a residence, a married couple has a capital gains tax exclusion of $500,000, while a single person can shield only $250,000 from tax.

Divorce agreement on dark light

Take care of health insurance

Don't forget about health insurance for you and the kids, if any. If only one spouse has employer-provided coverage, the divorce agreement should in most cases require that the kids remain on that spouse's policy.

As for the spouse who will soon be left uncovered, be aware of one option always available for the short term: COBRA. That's the law that allows you to stay on a divorced spouse's policy for eighteen months, although at a fairly high price. It may be a better deal to get individual coverage through a different insurer, or perhaps group coverage by joining a club or association.

Whatever the final decision, this issue should figure prominently in your settlement discussions and planning; this ought not be an afterthought.

Get your credit report

Get copies of your credit report from each of the three major credit reporting agencies. You can do this for free online at This is a convenient, one-step way to put all marital debt on the table for review and discussion. After all, dividing a couple's joint debt is a significant part of the divorce process. Moreover, it will be much easier to resolve any disputes now, rather than after the divorce.

Get separate accounts

Open individual accounts with your financial institutions (banks and brokerages). When marital assets are finally divided, these accounts will be ready to receive them. Often, too, a credit card in your name alone will be easier to get while you are still married—especially if you have a limited individual credit history.

Update your beneficiaries

Fill out new beneficiary designation forms for assets that have them—IRAs, company retirement plans and life insurance. These assets pass at death to the person named on that form—likely, your ex—regardless of what your divorce settlement or will says.

Dive deeper: Getting a divorce? Here are the financial considerations

This content was created in partnership with the Financial Fitness Group, a leading e-learning provider of FINRA compliant financial wellness solutions that help improve financial literacy.

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