Divorce is often described as one of the top five stressors in life and it’s not difficult to understand why.
There’s the emotional trauma of dealing with parting ways with someone who once held a special place in your heart. If there are children involved, there’s the undeniably stressful task of coming to an agreement as far as custody is concerned.
And then to top it all off, there’s the matter of your finances.
Going from a dual household income to a single income can be one of the most daunting aspects about getting divorced and it’s a reality you will need to get a grip on fairly quickly.
Danelle van Heerde, head of advice process at Sanlam Personal Finance, says your first priority should be reassessing your lifestyle and re-working your monthly budget to fall in line with your new household income bracket.
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It would be advisable to seek the expertise of a financial advisor to help you adjust and make the cutbacks needed to live within your new means.
“Consider realistic conspicuous saving opportunities, but don’t deprive yourself of your family of small things that will contribute to your overall wellbeing,” she says.
“This can sound overwhelming, so drawing on the professional services of a financial advisor will be key. They can help you look at the short, medium and long-term financial picture.”
If you happen to receive a lump sum settlement payment from your ex-spouse, resist the urge to dip into it.
Instead, deposit the money into a retirement fund because there are savings opportunities in the form of tax breaks.
“If you’re concerned about whether you’re saving a sufficient amount to guarantee a comfortable retirement, speak to a professional consultant who can advise on your current trajectory and what changes you might need to make,” van Heerde advises.
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Over and above your retirement considerations, don’t forget to make changes to your short-term, life and medical aid policies in terms of beneficiaries if you no longer want your ex to be a beneficiary.
“Ensure that children are covered as dependents in one of the parent’s medical aid scheme. If maintenance payments extend to medical aid, make sure they increase according to typical medical aid rate hikes, often around 5% higher than the consumer price index,” she says.
Update an existing will or have a new one drawn up if you don’t already have one because legally, if you don’t have one in place and something happens to you more than three months after the finalisation of divorce proceedings and you haven’t stipulated that you don’t want your ex to to remain a beneficiary, then the law assumes that in fact you wanted your former partner to remain your beneficiary.
In this case your ex, and not your children or next of kin, will have a legitimate legal claim to the inheritance.
“There is a legal three-month grace period after the divorce, meaning that if you pass away within three months of an official divorce proceeding, it will be assumed that you did not want your ex-spouse to be your beneficiary. Your ex-spouse will be treated as if they were deceased, thus allowing your estate to go to your children or next of kin,” van Heerde explains.
“However, if you did not legally change your will after three months, it is assumed you did want your ex-spouse to remain your beneficiary, and they will receive the stipulated inheritance.”
Last, but certainly not least, make sure that all of your assets – personal and business-related – are evaluated so you’re able to make decisions around whether to liquidate them or transfer them as intact assets to your ex if this has been agreed to.
“It’s advisable to check that your divorce attorney carefully examines all the business assets you’re entitled to. Safeguard your assets and benefits by making sure that they’re transferred without delay to avoid complications in the event of an ex-spouse’s death or financial troubles,” she advises.