Perhaps you were headed there anyway.  You’ve been unhappy in your marriage for some time.  But living in a global pandemic has heightened your awareness and now you’re thinking about divorce.   We specialize in financial planning for divorced women.  If you live in Oregon, there are several important questions you should ask.

What is the first thing you should do if you are considering a divorce?

A divorce is arguably the single greatest event that can change a person’s financial situation.  So, before you start the process of divorce, take some time to review your financial circumstances … today and what they will likely look like post-divorce.

Put together an inventory of your assets (e.g. home, investments, jewelry, collectibles, etc.) and liabilities (e.g. mortgage, auto loans, educational loans, consumers loans, etc.). Make copies of (or scan and save) all important financial documents.  Identify your sources of income.  Estimate what how much you will spend after your divorce.  Figure out how you will secure health insurance.

If this process seems a bit daunting, consider work with a CERTIFIED FINANCIAL PLANNER™ (CFP®) who is also a Certified Divorce Financial Analyst (CDFA®) and who specializes in financial planning for divorced women.

How do you plan financially for divorce?

Now that you have your finances in order, it’s time to develop an exit plan.  Where will you live?  It is common for women, particularly if they have children, to want to remain in the family home.  That may or may not make good economic sense.

How will you support yourself?  If you are working, is your income sufficient to meet your needs after divorce?  Do you anticipate receiving spousal support?  What about child support?  Or perhaps you have been the breadwinner and will be expected to provide support to your ex-spouse and your children.

If you have kids, who will be responsible for paying for their education?  Divorcing spouses often fail to address this very important and significant expense and that can lead to big problems later.  Consider using a 529 educational savings plan to save for education.

How is divorce different in Oregon?

Oregon is a “no fault divorce” state.  To explain what that means, we will first consider the opposite.  In states which allow “fault divorce,” a spouse can request the court to grant an expedited divorce under certain grounds: cruelty, adultery, desertion, confinement in prison, and inability to engage in sex.  Courts in these states may also grant a larger share of marital property or more alimony.

This is not the case in Oregon.  A person seeking divorce in Oregon does not have to have to establish her spouse was somehow at fault.  Instead, you can cite a reason such as “incompatibility” or “irreconcilable differences” or “irremediable breakdown.”

Oregon is also an “equitable distribution” state.  This means that property is considered as belonging to the spouse who earned it.  The court will divide property between divorces in a fair and equitable manner.  This is in contrast to “marital property” states in which property acquired before marriage is considered separate property.

How is property divided upon divorce in Oregon?

Oregon is an equitable division state.  This means that you and your spouse each own the income that you earn during your marriage.  You also have the right to manage property that is titled in your name.

However, when you go through divorce assets owned by you and your spouse will be divided.  You and your spouse may be able to agree on a division of your assets.  If not, the court will divide marital property in a way that the judge considers fair.  You should realize that “fair” does not mean “equal.”

To make sure your interests are properly represented, work with a family law attorney and a CDFA® who does financial planning for divorced women.

How will divorce impact your retirement savings?

Getting a divorce can be very costly.  If your divorce is contested, you and your ex-spouse may well spend tens of thousands of dollars on legal fees.   That will reduce whatever you both walk away with.

The divorce will also likely result in the division of your investments including brokerage accounts, real estate, busines interests, savings accounts and cash.  In addition, the retirement accounts that you and your ex-spouse held during marriage are considered marital property and will be subject to division.  If these accounts are held in publicly traded securities, such as a 401(k), 403(b), IRA and Roth IRA, it will be relatively easy to value them and divide them.  Pensions that provide retirement income must be valued by an actuary and divided by a Qualified Domestic Relations Order (QDRO) written by a lawyer, approved by a judge and administered by the plan administrator.

So, in all likelihood, your savings for retirement will take a hit.  But don’t despair.  Reset and plan for your retirement.  If you need help, work with a CERTIFIED FINANCIAL PLANNER™ (CFP®) who specializes in financial planning for divorced women.

Who can help you get through your divorce?

While it may be tempting to take a DYI (do-it-yourself) approach to your divorce and it is possible in Oregon, that approach rarely works.

If you and your spouse are on good terms, consider a collaborative approach to your divorce.  There are family law attorneys who specialize in this type of divorce.  In addition to the lawyers (one for you and one for your spouse), there will be a CDFA®, a divorce coach and child specialist (if appropriate).

If the situation with your spouse is more contentious, but still civil, consider mediation.  A good mediator may be able to get you to a palatable dissolution without great cost and in a reasonable amount of time.

If, however, there is a lot of disagreement and the relationship is unhealthy, even toxic, you may be forced to litigate your divorce.   This will be expensive.  However, you will need a strong family law attorney to make sure you are well-represented and treated fairly.

In all approaches to divorce, consider seeking a CDFA® with experience offering financial planning for divorced women.

What should you, financially, do after your divorce is finalized?

Review and update your personal insurance (health, life and disability and property and casualty).  Update your estate plan, including changing the beneficiary designation on your insurance contracts and retirement accounts.  If you are receiving spousal support, make sure there is adequate life insurance on your ex-spouse to protect the value of these payments.  Establish (or maintain) an emergency fund for unexpected expenses.  Consult with a tax professional about your new tax filing status.