When two lives have been intertwined in a marriage for several years, separating the smaller details of those lives can often prove to be difficult. While it would be understandable to assume that what is outlined in a divorce settlement is reflected in the affected areas of one’s life, this is unfortunately not always the case. For those in Colorado pursuing a divorce, there are some key financial details to keep in mind.
Many people have retirement accounts, life insurance or even a pension plan through an employer. These accounts usually name a beneficiary, meaning to whom the assets or funds will be distributed upon death. Generally, even a will does not outweigh the named beneficiary on an account. For example, a person might have specified that his or her spouse should receive the benefits of a pension plan in his or her will, but if an ex-spouse is still named as the beneficiary in the account’s documentation, then the funds will instead be passed on to that ex-spouse.
Additionally, joint lines of credit are far from uncommon for married couples. Everything from a mortgage for a home to a credit card reserved for emergencies can have both spouses listed, making both responsible for any debt owed. Any debt that cannot be paid off before the finalization of a divorce is usually addressed during asset division, divvying up who is responsible for what. However, no matter what a divorce settlement states, a creditor can still hold both parties responsible for non-payment. It is often a good idea to suspend a line of credit to prevent further debt from accumulating while the initial balance is being paid off, and a check of a credit report can provide an idea of the status of shared accounts.
Especially when there is debt that must be split between Colorado spouses, keeping a close eye on financial matters can be a good idea. When possible, a soon-to-be-ex spouse should be removed from certain accounts as a beneficiary, while any jointly held accounts should be closed. Although it may be tempting to simply address these matters in a divorce agreement without making the additional changes, failing to do so can leave a person and his or her assets vulnerable and unprotected.
Source: Forbes, “6 Key Money Matters After You Divorce“, Leslie Thompson, Jan. 8, 2015