By Brittany Heard, guest contributor
Having walked alongside several women as they went through separation or divorce, I have seen firsthand how overwhelming, emotional and isolating this transition can be. For many women, divorce brings not only grief and uncertainty, but also the sudden responsibility of managing financial decisions that may have previously been shared or handled exclusively by a partner.
While this season can feel daunting, it is important to remember that you do not have to navigate it alone. With the right guidance, education and support, it is possible to move through this transition with clarity and to emerge more confident, informed and financially independent.
If you are going through a divorce or separation, it’s important to keep several key points in mind to safeguard your well-being, now and in the future. Prioritize your financial organization. Collect all relevant documents and be sure you understand the rights and responsibilities embodied in your assets and liabilities. Seek professional guidance when needed, and remember to consider not just your immediate needs, but also long-term financial health, such as retirement planning and updating legal documents.
Assess your financial situation
Begin by gathering all relevant financial documents, including bank statements, retirement accounts, tax returns, loan agreements and property deeds. Having a clear picture of your assets, debts, income and expenses will help you and your attorney make informed decisions during the divorce proceedings.
With most couples I have worked with, women take on most of the caregiving, household management or emotional labor, while one partner may handle the day-to-day finances. If you have not previously been involved in financial management, know that this is common and does not reflect your capability. If anything feels unfamiliar or confusing, don’t hesitate to ask for help from your financial adviser and attorney. Their role is to help you understand each account and asset to ensure that nothing gets overlooked. Taking the time to educate yourself now will help you feel more confident and prepared when making important financial decisions on your own terms.
Understand marital vs. separate property
It’s important to understand the difference between assets acquired during your marriage (marital property) and assets owned before marriage or received as gifts/inheritance (separate property).
In Iowa, the law follows the principle of equitable distribution when dividing marital property during a divorce. This means that marital assets are divided as fairly as possible, which often results in a 50/50 split. The court considers several factors in determining a fair division, including the length of the marriage, each spouse’s contributions (such as income, child care or homemaking), the earning capacity of each party, any gifts or inheritances received by either spouse or potential tax consequences of the division. Understanding these factors could help you better prepare for discussions about property division.
For many women, it is especially important to recognize that non-financial contributions matter. Time spent raising children, managing a household or supporting a partner’s career is real economic value. Equity means considering future earning potential, caregiving responsibilities and long-term stability, not simply splitting assets down the middle.
For instance, I once worked with a client who owned a van used specifically to transport her special needs son in addition to her everyday transportation needs. During the asset division process, the attorneys initially proposed listing the van as part of her personal assets. However, I advocated that the van was primarily for her son’s benefit, not hers alone. By classifying it as an asset for her son, rather than attributing it directly to her, she was able to receive additional assets in the division, ensuring a more equitable settlement tailored to the family’s unique circumstances.
Think about your retirement
Women often face unique retirement challenges, including longer life expectancy, career interruptions for caregiving and lower lifetime earnings. That makes understanding and protecting your retirement assets especially critical during divorce.
Review the values of any retirement savings and how these assets may be divided. You may need a Qualified Domestic Relations Order (QDRO) to receive a share of your spouse’s retirement plan.
Review if you or your spouse owns any retirement accounts, such as 401(k), 403(b), 457(b) or Individual Retirement Accounts, including Roth. Look at bank accounts, brokerage accounts, real estate and farmland. An often-misunderstood piece is a pension or defined benefit plan. These types of retirement savings will provide monthly income at retirement and are a bit harder to calculate during a divorce. It’s important to request the official plan documents and statements, so that you can determine the current and future value of these assets. Consulting with a financial adviser or your attorney may help you fully understand your rights to a portion of these retirement benefits and ensure that they are divided fairly in your settlement.
If you have an immediate cash need, there are a few situations where you can take a one-time distribution from your spouse’s 401(k) without the 10% penalty, but it must be done immediately upon the division of assets. Make sure you understand what the tax consequences are for each decision you make. Consulting with a tax professional or financial adviser before making any withdrawals may help you avoid unexpected liabilities and ensure that you’re making the best choice for your financial future.
Plan for immediate and long-term expenses
Create a new budget based on your post-divorce income and expenses. Consider costs like housing, health insurance, childcare and education. Don’t forget to factor in one-time expenses related to setting up a new household, as well as ongoing costs.
One of the biggest decisions within a divorce or separation is housing. It is important to factor in the possibility of selling the family home to have two different new living arrangements. If you plan to sell the home, there are different cost basis exclusions for a single person versus a married couple. That means that if you bought a home for a low price and its value has grown more than $250,000 (or $500,000 if you are married), you will owe taxes on the gain when it is sold. Consider selling the home before the divorce is finalized if you are trying to avoid capital gains taxes, as the higher exclusion amount applies to married couples filing jointly. Every financial situation is unique, please consult a tax professional if you’re unsure what timing works best for you.
Review and update your legal documents
After your divorce is finalized, update your will, trusts, powers of attorney and beneficiary designations on life insurance and retirement accounts. This ensures that your assets are protected and distributed according to your wishes.
It is important that you update beneficiary designations to be what you desire. I have seen situations where an ex-spouse is accidentally listed on a beneficiary form long after the divorce. Work with your financial adviser and attorney to update everything to go to the intended beneficiaries.
It is also important to review debt. If you share a mortgage, credit card or other debt, confirm that the account is updated after the divorce, so the correct person is responsible and listed on the account. If a credit card is in the name of both spouses, both are technically liable even if the divorce decree specifies that one spouse is to pay it back. The other spouse needs to have their name removed from the credit card account. Take time to contact creditors and lenders to update account ownership and transfer responsibility for all debts to the correct person. This will help to avoid any negative impact on your credit or future financial obligations.
Seek professional support
Divorce or separation can be complicated, so don’t hesitate to consult with attorneys, financial advisers, or divorce financial planners who have experience working with women. They may be able to offer guidance tailored to your unique circumstances and help you advocate for your best interests.
Taking these steps may help you navigate divorce or separation with more confidence and lay the groundwork for a secure, independent financial future.
Brittany Heard is a lead adviser and shareholder at Foster Group. She works with Foster Group clients to help them define and pursue their financial goals. Brittany founded Foster Group’s Invested in Women initiative because of her passion for empowering female clients.
