Pre-Divorce Checklist: What To Know When “I Do” Becomes “Do I?”

The new year is often a time for resolutions, goal setting and kicking bad habits. With the feeling of “New Year, New Me,” it also tends to be a time to kick off divorce season. Couples usually try to push off divorce during the final months of the year, not wanting to disrupt holiday celebrations or bring additional stress to the season. The holiday magic can also bring false hope to couples who go into the season with high expectations for change. However, once the magic ends, “divorce” becomes a popular Google search. While divorce occurs throughout the year, the trend in the last two decades has been for divorce rates to peak in March and August, following the winter and summer holidays, respectively.¹

A great deal of decision-making and time goes into legally ending a marriage, hence why it’s called a divorce process. Here are some crucial steps you can take to prepare for an impending divorce and prioritize your emotional and financial well-being.   

Get ready

Divorce presents many emotional and financial hurdles. The early stages of the divorce cycle come with self-reflection, contemplation, gathering information on the divorce process, and potentially exploring alternative solutions such as marital or discernment counseling. As soon as “I do” becomes “do I?”, it’s essential to be prepared. Finding a tool to help you (1) organize important tasks and information, and (2) prompt the right questions to ask yourself can help minimize stress throughout the divorce process.

Gather financial information

Once the initial shock of divorce has settled, when “I do” becomes “I don’t think so,” it is important to have a grasp on your full financial picture by taking a complete inventory of your assets, including (but not limited to) investments, retirement accounts, property, checking and savings accounts, and emergency funds, as well as reviewing any liabilities like mortgages, credit card debt, personal lines of credit and auto loans. It’s also imperative to create a good filing system (both paper and electronic), gather the previous year’s tax returns, and order a full and free credit report.

Understand the road ahead

After taking inventory of your financial landscape, its helpful to build a supportive network of loved ones and professionals to help you navigate divorce's emotional and legal challenges. It’s often beneficial to reach out to friends, family or a therapist for support and guidance, and to speak with others who have been through divorce, in order to get ideas on building your empowering team of professionals. A supportive network will be crucial to help navigate the emotional challenges and provide different perspectives. A well-rounded team usually includes an attorney, financial advisor and therapist or divorce coach.

You may also want to spend time with yourself to confront the big questions that could keep you awake at night (e.g., Can I afford to keep the family home? Will childcare arrangements need to change? Will I have to return to work?). It’s normal to have these concerns, along with countless others, and experience sleepless nights during the process. That’s why surrounding yourself with a great team of professionals is paramount.

Important topics to address

Qualified Domestic Relations Orders (QDROs) and health insurance are two significant aspects that can have long-term implications beyond divorce, making them crucial topics to address before finalizing a Marital Settlement Agreement (MSA). A QDRO is required when dividing 403(b) plans and qualified plans, such as a 401(k) or pension. It’s a legal document that specifies how the plan will be divided between spouses. Without a QDRO, the split of these retirement accounts may result in penalties or adverse tax implications. Addressing health insurance before signing an MSA is also essential, especially if one spouse is covered under the other’s health insurance plan or if dependent children are involved. It would help if you began exploring coverage options with your/your ex-spouse’s Human Resources department at work. If that’s not an option, you should consider holding discussions about finding alternative coverage options (e.g., COBRA coverage, state-sponsored spousal continuation, or coverage through the health insurance marketplace). Divorce is considered a qualifying event, meaning individuals can enroll in a new health insurance plan outside of the typical open enrollment period.

Since every divorce is unique, this checklist serves only as a general guide. It’s essential to tailor these steps to your specific circumstances and consult the required professionals to help you get through the divorce as smoothly as possible.

¹ https://www.nytimes.com/2020/01/04/style/january-divorce-month.html

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