Divorce is one of life’s most stressful events. However, it can also be viewed as an opportunity to start fresh and provide you with a sense of financial empowerment. Here are four steps to help you develop a new plan for your future.
Review your finances after a divorce.
Divorce can take a toll on you emotionally and financially, requiring you to reevaluate and often significantly change your saving and spending habits.
Start by getting your current financial house in order.
Update your account.
Updating account information such as a change of address, new email, or phone number with Janus Henderson can be done online. If your name is changing, be sure to complete the Legal Name Change Form.
Update your bank information.
Don't forget to limit access to your bank account information. Check to make sure that any automatic payments and automatic investments are updated as well. Debit cards sometimes get overlooked, so be sure and update your information with any companies that may have your card information on file.
If you need to update your bank information or automatic investments on your Janus Henderson account, you may do so either online or by downloading the Bank Options Form. For security purposes, changing bank information for selling or redeeming shares requires the completion of the Bank Options Form.
Update your beneficiaries.
You may also need to update beneficiary information.
For non-retirement accounts, you may update existing beneficiaries online. If there is no beneficiary designation listed, you may add one using the Transfer on Death Beneficiary Form.
You may also want to consult an attorney to update legal documents associated with estate plans and trusts. Don’t forget to change beneficiary information on your 401(k), life insurance plans or other assets, as needed.
Your estate has several key elements. Here are some tips to keep in mind when dividing it:
Change of account ownership
Depending on which method and how you separate your accounts, updating account ownership by transfer is typically the simplest method because it is not tax reportable. Dividing assets by selling shares can result in unintended tax consequences.
For taxable non-retirement accounts, the resigning owner can divide assets by completing a Transfer of Ownership Form. The receiving owner must have an existing Janus Henderson account or open one by completing the regular account application. If the account is individually owned, find all the necessary forms and step-by-step instructions on the Individual Account Checklist. If there are multiple owners, download the Joint Account Checklist.
For retirement accounts, the current owner must complete a Signature Guaranteed Letter of Instruction stating that assets are being divided due to divorce and provide instructions for how the assets are to be separated. The receiving owner must complete an IRA Application for the appropriate type of retirement account if they do not have an existing Janus Henderson account.
Do you have questions about the change of ownership process? Call a Janus Henderson Representative at 800.525.3713 weekdays from 9 a.m. to 6 p.m. ET.
If your divorce is not finalized before the end of the year, you may still reap tax benefits by filing jointly. Keep in mind, once the divorce is finalized, typically you will file separately the next tax year.
Accounts for children
Accounts set up for children (and managed by a specified adult) may also need to be updated with the spouse that will assume custodial responsibilities. Because there is a shared interest, consider adding the other spouse as an additional mail recipient of statements.
This can be updated with new estate and guardianship plans. This may require the services of an attorney.
Separating health, life and disability insurance
It's a good idea to protect your beneficiaries by explicitly stating who has final ownership on all life and disability insurance policies. A court may insist that life insurance policies include child support or alimony payments. If you are the recipient of such payments, consider updating your policy to include these responsibilities from your former spouse.
These steps can help ensure your assets will remain protected.
Change your information.
Consider changing any passwords on your accounts and creating new usernames during divorce proceedings. You can use a password manager to set up unique, difficult-to-break passwords for all of your important accounts. You might also consider freezing your accounts if there is concern that these might be accessed.
Identify fraudulent activity.
While your separation may not be vindictive, ex-spouses can often be easy targets of one another since they've shared personal account and social security information for years. If you believe that there has been fraudulent behavior, immediately notify any institutions where this could have occurred. Learn more about how to secure your information.
Remove an authorized trader.
You and your former spouse may have previously allowed access to each other's accounts. If this is the case, you may need to update your account and limit their access by calling a Janus Henderson Representative at 800.525.3713 weekdays from 9 a.m. to 6 p.m. ET.
The financial needs of a single investor can differ greatly than those of a married couple. You may face new questions like:
How should I invest for retirement?
Who will pay for my children's college?
How will I pay for rising medical costs?
How much money do I need now versus later?
Has your risk tolerance changed?
These questions may create a new risk-tolerance profile for your investment personality, and it may warrant an adjustment in your asset allocation. With assets being divided, you may now be investing on your own, making figuring out a new strategy to meet your financial goals all the more important.
Your risk tolerance might have also changed, so it might be a good time to go over your investment mix with a financial professional or check your asset allocation online and see if you're still comfortable with your current selections.
Contact a Janus Henderson Representative at 800.525.3713 for answers to your questions about your next steps.