Financial Resource Center

Money Management

Life Change To-Do Lists

March 31st, 2003

Life changes--such as getting married, divorced, having a child, or facing widowhood--require more than the subsequent emotional adjustment. These milestones also signal the need to take stock financially and make any necessary adjustments. Making the right choices and changes will help you move forward with confidence and control.


Have the money talk. Sit down and set financial goals--do you want to save for a new house? Have five kids? Take yearly vacations? Retire early? Planning is easier once you know what you want to do. Decide if you're going to pool your assets or maintain separate share draft/checking or savings accounts. Corral credit. During the money talk, exchange credit reports and take a financial inventory. Who owes what? How many credit cards are there between you? Are there problems or red flags on either credit report? If your goals include buying a home, car, or having children, focus on cleaning up any credit problem and curtailing future debt. "You don't want to have a situation whereby you've both been renting and you want to buy a house or car and then you get surprised," says Janet Fox, president of ACH Investment Group in Raleigh, N.C. It may be advantageous for the partner with better credit to list his or her name first on the application to help secure the loan or a better rate, adds Fox. To maintain your individual credit history, keep at least one credit card or loan in your own name.
To maintain your individual credit history, keep at least one credit card or loan in your own name.
Make name change notifications. Make a list of agencies to notify if you're changing your name, including credit card issuers, the Social Security Administration, the motor vehicle department, and the U.S. Passport Office. With tightened security for travel, having the same name on documents is especially important, says Fox. Find out if you need to submit proof of marriage with your name-change request. Create or update your wills and powers of attorney. "A current will is very important," says Fox, "because depending on state law, everything might not automatically go to your spouse if you should die." Also set up a durable power of attorney for financial matters and, if appropriate, a health-care power of attorney. Check your insurance. Review your auto, health, property, disability, personal liability, and life insurance coverage. Update beneficiaries on your policies, your IRAs (individual retirement accounts), and other investments.


Educate yourself. "Get a handle on where you are financially," says Howard Dvorkin, president of Consolidated Credit Counseling Services, Ft. Lauderdale, Fla. Go through financial accounts and figure out where the money is. Pull credit reports to see if there are any credit cards or loans that you don't know about.
Before your first visit to an attorney, make copies of all financial records.
Collect information. Before your first visit to an attorney, make copies of all financial records, including statements from financial institutions and brokerage companies, tax returns for the past two or three years, mortgage, copies of financial statements on file at any financial institutions, insurance, safe deposit boxes, wills, and trusts. Establish credit. "Try to establish credit on your own before the breakup," says Dvorkin. Open and fund a share draft/checking and savings account in your own name. Get a credit card in your own name and manage it carefully. Update wills and beneficiaries. Check your will, all insurance policies, and financial accounts such as pensions and 401(k)s to change beneficiaries. Separate credit accounts. Debt incurred in a joint account will follow both spouses after the divorce. "Regardless of what the court says about who's responsible for paying off debts, creditors don't care," says Dvorkin. "If the responsible spouse quits paying, creditors will go after the other spouse." Talk to your lawyer about how to best close joint accounts and limit your liability.
Debt incurred in a joint account will follow both spouses after the divorce.
Maintain insurance coverage. During separation you'll still be covered under your spouse's health insurance, but once you're divorced, health insurance must be specified. If appropriate, comparison shop to get the best value on auto, property, disability, health, and life insurance.

Death of a spouse or parent

Get 10 death certificates. "You'll need these extra copies for such things as insurance, 401(k) payouts, Social Security, probate, and to change the title on property," says Christine D. Moriarty, president of Money Peace, Bristol, Vt. Organize finances. If it's not already done, go through all financial papers and make a list of assets and liabilities; gather statements from financial institutions and brokerage companies, insurance policies, employment records, tax returns, and so forth. "Write a list of any other bills that may be owed, including school loans, credit cards, utilities, and mortgages," says Moriarty. "They all need to be paid, but all [creditors] need to be contacted to inform them of the death. Student loans die with the person, but all the rest have to be paid out of the estate."
Student loans die with the person, but all the rest have to be paid out of the estate.
Cancel accounts and services. Check for and cancel any automatic or online bill paying services unless you'll continue to use them. Notify any fee-based membership or subscription services to cancel accounts such as health clubs, magazine subscription, online services, and so forth. Contact income providers. Notify old employers, pension fund administrators, and financial institutions holding IRAs or other retirement income accounts. Each may have a different beneficiary. If the deceased received Social Security benefits, notify the Social Security Administration as soon as possible, says Moriarty, since the estate will have to pay back money received after the death. Check with a certified public accountant or tax preparation service to see if there are tax considerations that need attention. Social Security may pay a lump sum death benefit of $255. Contact life and health insurance providers. Life insurance companies will distribute money to the beneficiary listed on the policies. Don't cancel health insurance until all outstanding bills have been paid.

Expecting a new baby (birth or adoption)

Understand your finances. Take a look at what you owe and what you make. If you're planning on moving, buying a bigger car, or want to quit work to raise the baby, you'll need to create a budget that allows you to "forecast where you will be financially," says Chris Viale, general manager of Cambridge Credit, a not-for-profit credit counseling agency in Agawam, Mass.
Besides instructions on how the estate should be distributed, wills should also include the name of whomever the parents have chosen as their child's guardian.
Insure coverage. Visit your employee benefits department to find out, in plain language, what your policy covers, and how much time you have to add a new baby or adopted child to your policy. Viale also advises parents to research and understand other policies at work relating to such things as maternity or family leave, and flex spending accounts. Create or update your wills. Besides instructions about how the estate should be distributed, wills also should include the name of whomever the parents have chosen as their child's guardian. Parents also may wish to appoint a different person to be the guardian of the child's money, according to Tracy Stewart, CFP (certified financial planner) and CPA (certified public accountant) in College Station, Texas. "Every time you have a new baby, add that child's name to your will. Revisit the guardian choice at the same time," says Stewart. Go to board-certified estate planning attorneys. She says it can be a "pay me now or pay me later" situation if the will isn't well-written. Take advantage of tax credits. Claim each of your children on your tax return. According to Stewart, parents may be eligible for up to $10,000 for qualified adoption expenses, and even more if adopting a special needs child. Parents should check with a CPA or tax preparer for more information. Check out child care. Viale directs parents to the National Child Care Information Center for information about what to look for in a provider.
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