Reconsidering your financial arrangements – whether or not your income will be reduced – should be a priority as you adjust to your new circumstances.

The major issues demanding attention and resolution include the following: Retirement Issues The DRO (Domestic Relations Order). A divorce settlement oftendetermines how any anticipated future pension and/or retirement plan benefits will be divided. You may receive part of your ex-spouse’s retirementbenefits, or your ex-spouse may receive part of yours. However, anemployer may distribute retirement plan benefits to a former spouse only after receiving a court-issued document that meets the requirements for a Qualified Domestic Relations Order (QDRO). If you are to receive benefitsfrom your ex-spouse’s plan, you must follow through on obtaining the QDRO and ensuring that the plan’s administrator receives it.

Change of Beneficiary The individual you have named as the beneficiary of your retirement plan account will automatically receive all the funds in your account after your death. A divorce or other agreement generally has no effect on a beneficiarydesignation. Therefore, you must formally amend the appropriate plandocuments to name someone other than your ex-spouse. As soon as yourdivorce becomes final, you should give your plan administrator a new beneficiary’s name. Also, be sure to change the beneficiary on any IRAs youmay have. For employer-sponsored retirement plans, please consult withyour Human Resources Department on how to change your beneficiary.

Adjusting Retirement Plans Your financial future may look very different without your spouse. You maybe able to improve your lifestyle after retirement by taking advantage of additional current contributions to your 401(k) or other tax-deferred retirement plan. You might also consider contributing to a Roth or other IRAto supplement your employer’s retirement plan.

Social Security Your ex-spouse’s work record may entitle you to receive a benefit once you are at least 62 years old and meet the law’s conditions. So, after a divorce,it is a good idea to call the Social Security Administration to inquire about any benefits you can expect to receive.

Investments Your new marital status may mean a shift in your investment goals and, therefore, in your investment strategy. Your present assets may be more orless risky than you might want in the future. You should also examine yournew living costs to make sure your arrangements are realistic for your income and needs, and to decide how much and how often to invest for the future.

Financial Documents After a divorce or separation a general review of all your financial documents is advisable. In light of your new situation be sure to examine thefollowing: Estate Plan. If your spouse is your heir, you need to revise your will toname another beneficiary(s). Also, marital status is often a key factor inplanning an estate. You should review your present plan with yourprofessional advisor to update it for your new situation.

Life Insurance. The change in your marital status most likely will require areevaluation of your life insurance policies and, at the least, a change in your beneficiary designations.

Credit Records. It is important to separate your credit history from yourspouse’s history so that future reports will be based only on your own credit use. That will involve notifying credit bureaus of your divorce and removingyour spouse’s name from any joint credit accounts.

Get Professional Assistance A divorce or separation may give rise to numerous tax issues, and a settlement agreement that reduces taxes may benefit both sides.

Professional legal and tax advice is essential as your agreement is being negotiated.

ALAN S. MOORE is a financial advisor of Legg Mason Wood Walker, Inc., adiversified securities brokerage and financial services firm that is a member of the New York Stock Exchange, Inc. He writes this column every Wednesdayfor L’Observateur.

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