Pension plans
It's quite common for divorcing spouses to split any money that's accumulated in pension plans.

When you get your share of those funds, financial educator and author Eva Rosen, best known on the Internet as the Tax Mama, has one piece of advice: "Roll that puppy over fast."

Although you won't pay penalties if you hold on to the money, you'll pay taxes on it.

"Redeposit it into an IRA," she says. "That's one of the biggest problems I find. People just don't get that."

Also, the only way to make changes in a retirement fund is to send a Qualified Domestic Relations Order (QDRO) to the 401(k) plan administrator, says Carol Ann Wilson, founder of the Institute for Certified Divorce Planners. It's quite common for attorneys to not order this at the time of the divorce.

"I've seen them take months or even a couple of years to do it," she says.

If that has happened and you're supposed to receive part of your ex's fund, you have a one-time window of opportunity to withdraw some -- or all -- of those funds before age 59 without penalty if you really are in a bind for cash.

"It has to be done before the transfer is made," she says. "It's still taxable, but there's no penalty. All certified divorce planners know this rule."

Credit
Now would be a really good time to order copies of your credit reports from the three major credit bureaus. Check for errors and make sure that any debts your ex-spouse may have aren't showing up on your report. If you didn't close your joint accounts, you need to do that right away.

If you weren't the primary income earner and had credit in your spouse's name, you should take this year to start working on building your own good credit history. If all you can get is a secured credit card, get one, charge a purchase and pay it off promptly.

Financial documents
First things first: You need a new will.

Then, look at your other financial documents. You might want to change the beneficiary on your 401(k) and any insurance policies you have.

Most couples have their assets titled jointly. Although the assets may have been separated in a decree, certified public accountant and personal financial specialist Bob Doyle at Spoor, Doyle & Associates in St. Petersburg, Fla., says one or the other of you will have to handle the paperwork to make it official. In the case of a mortgage, it may take something more formal.

"Creditors love to add debtors, but they're not crazy about taking them off," he says. "More often than not in divorces, houses are sold, the mortgage is paid off and that solves the problem. If the house is maintained and both spouses are on the mortgage, it will take a court order to get one spouse off."

You could also solve the problem by refinancing in your name alone.

"In today's lower interest rate environment, that might make sense all the way around," Doyle says.

Budgeting
Wilson says one of the biggest mistakes she sees with the spouse who was the lower wage earner is a failure to adjust to the new financial status.

"The reason the poverty roles are swelling with divorced women with children is they think they can continue at the same standard of living," she says. "In eight to 10 years, their assets are gone; they've spent it. They need to try to live on what they earn and their support payments."

Sometimes that means telling the children you can't afford the clothes or vacations they used to get. Wilson says that's tough for some parents to handle, but kids often will rise to the occasion.

"Children take this on as a challenge; they're an ally," she says. "I've seen children think, 'This is great. I get to go to the movie with Mom.' Let them help. It helps them. It's a disservice to let the kids think there's still unlimited income."

Taxes
Alimony and child support may serve similar functions, but to the IRS they're complete opposites. Child support is not considered income to the recipient, nor can it be listed as a deduction for the noncustodial parent. But if you're paying alimony, you can deduct it on your income taxes. If you're receiving it, you have to pay taxes on it.

Obviously, if you're receiving both, it makes sense from a tax perspective to get as much of it in the form of child support as possible. If you're paying both, the opposite is true. Let the lawyers fight that one.

Marlisa Hodgin, tax program manager at the nonprofit credit counseling service Springboard, says to make sure the divorce decree specifies which portion of the support is for the children and which portion is for alimony. If you don't separate them, it may all be considered child support.

By the way, if you only make partial payments, all of it is considered child support until that's paid up, Hodgin says. That means no deduction for alimony payments until your child support obligation is fulfilled.

But if you're required to make the house payment on a jointly owned home, you can deduct half the total payment as alimony. If you itemize and the house qualifies, you can claim half of the interest and property tax on your Schedule A.

If you have children, it's often a good idea to have the court decide who can claim the children as dependents on the tax returns and have that stated in a court document, Wilson says.

Bills related to tax advice, retention of a taxable asset or the production of taxable income are deductible in the year you pay the bill, so have your attorney break it out for you, says Stephanie Blum, a West Los Angeles family law attorney and author of Divorce and Finances: Know Your Rights Clearly and Quickly.

This year, many of your deductions may increase, especially if you have more than two children, you're working and use child care. You'll want to review what you're having withheld from your paycheck for taxes to make sure you're not having too much or too little taken out.

"If you manage things properly, you can both arrange to be head of household instead of being plain single and increase the amount of the child care credit," says Tax Mama's Rosen. "Two heads of household come out better than two single people.

"If you can get along well enough to work out some of the details, there are some neat things you can arrange. There are ways to reduce your taxes, but it takes a certain amount of cooperation which, if you could have done, you probably would still be married."

Need some more advice? For more detailed information, check out Bankrate's Financial Survival Guide for Divorce. Also, see Consolidated Credit Counseling Service's free booklet, Credit and Divorce.

-- Updated: Nov. 14, 2002