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10 steps to a money-smart divorce
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4. Keep separate property separate.
Assets you brought to the marriage separately (real estate, vehicles, an inheritance, gifts, money you acquired before marriage, etc.) are yours to take away from the marriage. You drive in with an SUV, you drive out with an SUV. But if you put any separate assets into a joint account, they may be considered joint property and will be divided depending on the property laws of the state in which you reside.

"If you're going to take separate money and give it to the marriage, then either decide to kiss it goodbye or do some loan documentation, because if you don't, you're going to lose it," says Smith.

Separate debt also travels with you. For example, if you brought a student loan into the marriage, you carry it out with you, even if your spouse was helping to pay it off.

5. Consider selling the house.
Traditionally, women tend to hold onto the family home at all cost. Unfortunately, it's often an emotional decision that makes poor financial sense.

"Studies say that women will keep the house and give up the retirement money," says Hayden. "It is one of the biggest mistakes women make. The problem with that is, many times she's not going to be able to afford to stay in this house anyway, and if they've been in the house for a long time, she could stand to lose a good share of her capital gains exclusion, which is $250,000 for singles and $500,000 for couples."

"I recommend that they look seriously at selling that house, even though it's hard. It's an emotional tie that ends up strangling the woman. She ends up losing it anyway, and she has given up her retirement money. I ask women to just think a little bigger."

Smith agrees: "Sell the house and take what you make and put it into something where you know that you're able to pay your expenses and have a cushion, especially in an economy where we have no clue what's going to happen."

6. Change those beneficiaries.
Despite what your divorce decrees, if you don't change the beneficiaries on your will, trusts, IRAs, pension plan and life insurance, your ex could wind up with an unexpected windfall in the event of your untimely demise. As long as you're at it, this is a good time to review your various policies to make sure they fit with your new circumstances. And don't forget to delete your ex-spouse from these documents and policies and change your marital status where applicable.

7. Reclaim your name.
For some women, divorce adds another task: reclaiming your name. If you are reverting to your maiden name, you may be required to produce the divorce decree or document signed by your ex-husband that acknowledges your new name in order to obtain a new driver's license, passport or other identification. Use your new name to announce your new marital status to your circle of contacts: your doctors, employer, human resources department, children's teachers, landlord, pharmacist, mail person, health insurer and clergy.

Don't forget to register your name change (and adjust your withholding if needed) on your W-4 and other tax forms and with the Social Security Administration. A mix-up could cause you to lose valuable Social Security credits for your work, and you may have to show proof of both names when applying for benefits.

8. Check your retirement.
Speaking of Social Security, if divorce finds you within chipping distance of retirement, you will want to contact the Social Security Administration. If you are at least 62, were married for at least 10 years, have been divorced more than two years, have not remarried and don't qualify for an equal or higher Social Security benefit yourself, you may receive benefits based on your ex-spouse's Social Security record, even if he or she has not applied for benefits that he or she is eligible to receive. If you remarry, you will stop receiving benefits, unless this new marriage ends. If you are raising a child younger than 16 years old from the marriage, you may receive benefits on your ex-spouse's record even if you were married for less than 10 years. In most cases, you can expect the same amount you would have gotten if you had remained married, and possibly all of it if your ex-spouse dies. The benefits you draw do not affect amounts due to your ex's current spouse.

9. Guard your health coverage.
Sadly, divorce often forces one party to sacrifice health care coverage. Don't let this happen to you. One uncovered medical emergency can cripple your finances. Under the COBRA program, you are guaranteed 18 months of health coverage, albeit at rates that might induce cardiac irregularities. If you have no other avenue for affordable coverage, keep the COBRA plan in place until you find one. "You can't afford not to think about things you need such as health insurance, disability and life insurance," says Hayden. "If you can't afford all these things, you really should consider getting rid of the house and downsizing."

10. Dust yourself off and start living.
Yes, you've survived a train wreck. If you accomplished most of these steps, you are more aware than you've ever been of your true financial picture and what you need to do about it.

If you receive a lump-sum payout, don't splurge for revenge or because you feel you deserve it. There is a wealth of financial planning help online. Bankrate.com is a great place to begin and, when you're ready, consider hiring a financial planner to help you sort out your newly single money situation.

Financial experts recommend that you pull your credit report three months after the divorce and clean up any loose ends. Again, Bankrate has form letters to help out with this task.

Most importantly, remember that living well is possible whatever your net worth or marital status.

Jay MacDonald is a contributing editor based in Mississippi.

Bankrate.com's corrections policy -- Updated: June 30, 2006
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