Divorce can be overwhelming, especially when it comes to finances. If you're in the process of separating or finalizing a divorce, the end of the year presents a critical window to take control of your financial future. Making the right financial moves now can help you start the new year with clarity and confidence.

Here are five smart money steps to consider before December 31:

1. Review Your Tax Filing Status

Your marital status on December 31 determines how you'll file your taxes for the year. If your divorce will be finalized by year-end, you’ll likely file as “Single” or “Head of Household,” depending on your custody arrangement. If not, you may still be required to file as “Married Filing Jointly” or “Married Filing Separately.” Understanding your status early can help you plan for tax implications and avoid surprises.

2. Adjust Your Withholding or Estimated Payments

If your income or tax filing status is changing, you may need to adjust your W-4 with your employer or modify your estimated tax payments. This is especially important if you’re transitioning from joint to single income or if you’re receiving (or paying) spousal or child support. Being proactive can help you avoid underpayment penalties or a big tax bill in April.

3. Update Your Budget for the New Year

A realistic, updated budget is essential post-divorce. Use this time to assess your monthly income, expenses, and savings goals. Factor in any new housing costs, insurance, legal fees, or support payments. Budgeting now helps you start the new year with a clear understanding of what’s affordable and where you may need to make adjustments.

4. Max Out Retirement Contributions (If Possible)

If you’re still working and have access to a 401(k) or IRA, year-end contributions can be a smart way to reduce taxable income and build long-term savings. However, if you're in the middle of a divorce, timing is key. Contributing after your divorce settlement—but before December 31—can help ensure those funds stay with you.

And if retirement assets are being divided, understanding how much you may gain or lose is essential for your future financial planning. If you need guidance on what this means for your retirement goals, I’m here to help.

5. Review and Update Beneficiaries

It’s easy to overlook, but many people forget to update beneficiaries after divorce. Check your retirement accounts, life insurance policies, and other financial accounts. If your ex-spouse is still listed, they could inherit assets you didn’t intend them to receive. Before the end of the year is a great time to review and update these details.

Take Control of Your Future

If you are contemplating a divorce or are in the middle of one, I am here to help! I can give you valuable guidance on financial decisions you make during the divorce process, so you emerge financially stronger and better empowered to tackle the next chapter of your life.

Kimberly can provide step-by-step guidance on matters related to divorce. With a wide range of experience and expertise related to divorce issues, our team will simplify the process and provide much-needed clarity in areas such as long-term tax consequences, asset, and debt analysis, dividing pension plans, continued health care coverage, stock option elections, protecting support with life insurance, and much more.

Schedule Your FREE Discovery Call Today!

This information is not intended to be a substitute for seeking legal advice from an attorney. For legal or tax advice please seek the services of a qualified attorney and/or qualified tax professional.