NerdWallet's Smart Money Podcast - When Marriage Ends: How to Protect Your Assets, Update Your Estate Plan, and Survive the Costs

Episode Date: August 3, 2026

Learn how divorce can reshape your finances and what steps to take when legal fees and child support strain your budget. What does divorce mean for your financial life? How do you rebuild when child support and rent are already eating up half your income? Hosts Sean Pyles, CFP®, and Elizabeth Ayoola are joined by personal finance Nerd Kim Palmer to tackle a listener's question about surviving the financial reality of a split. Kim walks through what to prioritize when a marriage ends, the real cost of divorce, and how to find room in your budget when housing, child support, and legal fees are all competing for the same paycheck. Elizabeth shares her own experience navigating divorce as a first-time parent, and Sean reflects on the major financial turning points in his life, discussing how big changes can become unexpected opportunities to reset your goals and rebuild on your own terms. Best Debt Settlement Companies of 2026: Compare Fees and Savings https://www.nerdwallet.com/personal-loans/learn/best-debt-settlement-companies  National Debt Relief https://www.nationaldebtrelief.com/  Subscribe to our podcast’s free email newsletter for bonus content and more from our hosts at https://smartmoney-nerdwallet.beehiiv.com/  Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header Smart Money’s YouTube Channel: https://youtube.com/@nerdwalletsmartmoney To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend. *The show notes were created with the assistance of AI. They have been reviewed by our editorial team for accuracy and quality. Learn more about your ad choices. Visit megaphone.fm/adchoices

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changes upend your life quite like divorce. While this change is expensive, challenging, and rarely easy, it could be an opportunity to set yourself up for long-term financial success if you play your cards right. Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions, and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Elizabeth Ayola. Now this episode, we're taking on a question from a listener about something we hope never happens to any of you, divorce. What happens to your finances when the relationship ends? Here's the listener's question. Always been curious, how does one navigate divorce, legal fees while trying to save up in the rising costs of life? Assuming child support payments and rent take up about 50% of your

income, would love to hear your thoughts. To help us answer this listener's question, we're joined by Kim Palmer. Kim, Kim, welcome back to smart money. Thank you so much for having me. Our listener's question is really broad and kind of simple, but divorce touches so many aspects of your financial life, from taxes to your budget, to what you're paying for rent, and kind of everything, really, in some way. So can you lay out a few immediate areas that someone who's experiencing divorce should be thinking about? Going through divorce is such a big life transition. And it's one of those things that can really just trigger you to review everything about your finances. I mean, all of a sudden, you're going from a unit of two financially to a unit of one. So that impacts,

so many different layers of your money. I am not a financial planner, but I've interviewed a lot of financial planners who specialize in divorce and helping clients navigate that. And one theme that comes up, almost every interview, is that the most important first step is to really do a full and complete review of your finances so you know exactly where you stand. That includes cash flow, income, any investments, just understanding every single aspect of that because in many cases, one partner has been handling the finances and then the other partner is a bit in the dark when it comes to navigating that post-divorce life. So number one is just knowing where you stand. And then from there, you can figure out, okay, what steps and adjustments do you want to take?

It might mean closing old accounts that you shared with your former partner. It could mean focusing on paying off debt. But before you even know where to begin, it helps with that big picture review. And that's why we often emphasize that you and your partner while you're still together. should have regular money conversation. So even if one person is the more ongoing household money manager, the other person's still in the loop, and that way they're not starting from scratch if something like divorce or even a death happens. But if you haven't been having those conversations, it's not too late. Well, it might be too late for the conversation,

depending on how the relationship went. But it's not too late to educate yourself and start learning everything that you need to learn so you can become financially independent. One area that people often overlook when they're getting separated is their estate planning, documents and their beneficiary designations, I hear so many stories from people who they have a death in the family and they find out that their father left everything to an X that they didn't really want to. And now the kids or maybe the current spouse are out of luck when it comes to getting something like even life insurance money. So please review those areas too. I think it's one of those things that's like a task you just don't want to deal with. But just put it on the to do list and get it

done because you want to make sure all of that is up to date. If your parents have recently gotten a divorce, putting myself in this bucket, I had to remind my dad to also update his estate documents, which he didn't know he needed to do, right? So it is a very simple but important thing. All right. So divorce is a process of separation and you are dividing your assets. Assuming that you don't have a pre-nup, we know Sean is pro pre-nup, right? Very much so, yes. And for people out there who are already married, you can get what you call a post-nup, right? Yeah, that's important. So how your assets are split up can be really complicated. And it also, you can be a point of contention. I know people who are going through multi-year divorces because of this.

So is there a general playbook for this, Kim, because splitting things 50-50 also is not always the fair way to go about it? Well, the short answer is no. There's definitely no simple and easy way to say that it applies to everyone because it's so situation-dependent. And there's so many factors, of course, state law comes into play here, whether you have that pre-nup or post-not written out, even how you treated assets within your marriage. So did you co-mingle everything? Did you keep it separate? There's so many questions. So I think that's why it's so important to have professionals, financial professionals or a lawyer who can help you navigate this and really advocate for you throughout this process. And I actually think one positive thing I've seen come out of our culture lately is a bestselling book. I don't know if you two have read it. Strangers by Bell Burden. Basically, it's such a good book. I totally recommend it. It is a memoir that delves into how she navigated her. her divorce. And she comes from a very privileged background and she's up front about that. But the challenges that she faces as someone that was not engaged with her finances until the divorce, it's really a universally relatable story. So she navigates all kinds of things. Like how do you

even know where your money is when you haven't been paying attention for years? So it's a good wake-up call, I think. So if this is a topic that interests you, I would recommend delving into that book because it's just a reminder. We all need to pay attention and we need to know where our money is. also talk about what happens when people are living in community property states. It's just states like Texas, California, Wisconsin, where assets acquired in marriage are considered owned 50-50 by both spouses. Does that happen to make divorce anymore straightforward or still no? I would definitely never call it straightforward because it's always complicated. But once we start bringing up these specific state laws, I think that means that, okay, it's time to talk to a lawyer who

can really understand this because it gets complicated very quickly. What about the cost of divorce? I know it can vary widely. I personally got divorced in the UK. It was uncontested. We had no asset. So maybe I spent 200 pounds, the equivalent of under $400 in total to get divorced. But I know some people are spending thousands and hundreds of thousands.

It varies a lot. I check this stat with legal Zoom. And basically, as you're describing, it can start with very little. If you have a simple situation, it could even be as low as $150. But then it quickly can escalate. to tens of thousands of dollars because there's cases where you're going through the court system and you're arguing for months or even years over this stuff. And so the average probably falls somewhere between $5,000 and $10,000. And that's just for the divorce itself. Of course,

there's other costs to consider that come after divorce, like managing two homes, additional childcare, all of that. So those can be even more costs. And the listener asked how to manage the extra cost like legal fees. I think it really starts with low. looking over your spending, seeing if there's places you could cut back, even temporarily to redirect towards that immediate cost where you have to pay a professional, whether it's a lawyer or a certified financial planner, to help you get through this. All of this can really add up. And this is probably an area, too, where you maybe don't want the cheapest attorney you can get to do this. You want to vet someone, make sure that they're a good, solid, reliable professional, and that might cost you a little more, too, to get that kind of service. For anybody out there who maybe can't afford a divorce, look into your state resources. There are sometimes fee waivers that you can access that can help you with those fees as well.

So Kim, our listener is concerned about managing divorce while making progress on other life and financial goals like saving money and just keeping up with the rising cost of living. What advice do you have there? Anytime you go through a big life transition, whether it's a divorce or a marriage or a new baby, it really gives you the chance to step back and think about your big financial goals and what has changed because possibly going through divorce means you're answering some of the big picture questions about your future differently, down to what are your dream future vacations, how do you envision retirement now? Do you want to move or live in a different city altogether?

So I think that it gives you the chance to really step back and brainstorm about that. And once you've done that brainstorm and taken some time to reflect and think about what are those new goals, then you can make a plan to save for them because maybe it means making some shifts in your spending today so you can put aside a fund for your dream vacation in Hawaii or whatever. it is. So it's definitely important to think about that. People I know have gone through divorce have used it as an opportunity to totally reinvent their lives or it's more like they were already in a process of reinvention and the divorce was just one step in that process. So it is a good opportunity to look at certain goals and think, hey, maybe I actually don't value this goal as

much anymore. And so I won't be putting as much money or time into that. But funding the divorce is an immediate goal. Let me take care of that financially. And then also focus on rebuilding my new life. So that's a good way to kind of reallocate where you're spending your time and money and what you want from your life. Elizabeth, can I put you on the spot and ask if you experienced anything like that after your divorce? I don't want to speak for everyone else, but I think it's almost sometimes hard not to go through a reinvention unless you just stay stagnant because your whole life is uprooted and changing no matter how long you were married, really. So I definitely went through that and I think to your latter point, Sean, my divorce was a byproduct of the work I had already

started doing. So it was like, well, I'm not happy with my life. How did I get here? here. I started going to therapy and I was like, well, actually, I shouldn't be here. Then the divorce is kind of what came after that. But it definitely gave me a chance. I think there's so much grief and heartache that comes with divorce. But on the brighter side is you do get to reinvent yourself and say, who do I want to be at this phase in my life? And you also selfishly get to do that by yourself because lots of compromise comes with marriage, right? And you make lots of sacrifices, but you get to just say, what do I want and go for it? Something else that comes with divorce is higher expenses because you are no longer a two-income households. Our listener assumes that child support and rent will take up to

50% of their income. But Kim, do you have an idea of how much child support typically takes up in a divorce budget? It depends on many different factors. But I do think this estimate from the listener that child support and rent together will take up about 50% of their income, that sounds reasonable to me because housing itself can take up typically 30 to 40% of a person's budget. At NerdWallet, we often talk about the 50, 30, 20 budget where you have 50% of your take home pay going to needs, 30% to wants and 20% to debt payments above the minimum and savings. But of course, you can adjust those numbers to whatever fits your life. So sometimes it's 60, 20, 20, 20, whatever works for you. And that guideline, it just gives you an estimate of where you can think about how you're spending.

And like you said at the beginning, Kim, this is really a time to reevaluate your finances from the top down. So getting the understanding of where your budget is going. and how child support or other household expenses are going to fit into that is super crucial. And it might be a good idea to actually track what you're spending was like before the divorce and then for the few months after and just compare and see where you need to make some adjustments because I'm willing to bet that 50% that needs category is probably going to be higher because like you said before, Elizabeth, you are now a single income household, most likely, unless you have roommates or something.

And so you're just putting all this on yourself and you'll just have to cut back maybe in that wants category or that savings category to make everything balance out. And just one more thing to throw out there as well, I'm hearing of lots of people who separate or going through a divorce who end up moving back home. So I know it can feel maybe like a shameful thing because you feel like you're going backwards, but sometimes you just need to save money because divorces can be expensive, increasing your income until you get to a point where you could take care of yourself. And if you have kids, your kids too can take a while. So there's no shame and get in some extra help. Okay, well, we're going to take a quick break. Stay with us.

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With up to 444 kilometers on a full charge and DC fast charging from 10 to 80% in about 30 minutes in ideal conditions. Plus, ample ground clearance and symmetrical all-wheel drive make the 2026 Trail Seeker the most capable EV Subaru has ever built. Test drive it at your local Subaru dealer or visit Subaru.ca. All right, Kim and Sean, so far we've been talking about the nuts and the bolts of financial aspects of divorce. But as I was kind of touching on and you as well, Sean, divorce can be a really emotional experience too. And it can take a very long time. How can people keep their emotions somewhat in check so that they don't do more harm to their finances? Oh my gosh, Kim, help.

People can start emotional buying and just sad spending and just doing all of these kind of self financially destructive things to cope. The best thing that a person can do just to be prepared to navigate this is to be engaged with your finances no matter what you're going through. So whether you're single, you're married, you're happily married, you still want to make sure you're just understanding your money and able to take over all aspects of it if needed because all kinds of things, unexpected things can happen. Divorce is one, but a partner becoming ill or incapacitated, anything can happen. So you just want to make sure that you are engaged.

with your finances because I think if you can reduce that stress of suddenly having to manage every aspect of your money, if at least that part is a little bit easier, it can help reduce the rest of the stress in your life. Divorce is also a moment to reflect on your new life ahead and what changes you might want to make, how you've been managing your finances or just your day-to-day life. Elizabeth, was that your experience with your divorce? Well, yes and no. So one of the things in my marriage, which I've talked about on the show before is that I was

the primary income maker. So there was not a huge transition in terms of me going from like two incomes to one because I kind of was already paying for most things myself. I would say the divorce happened very close to me having Ayo. So he was maybe around two years old and we separated. So I was already drowning trying to figure out how to go from a bohemian creative earning peanuts to a mom who now had to take care of a child. So I think my focus just more was on, okay, it's officially going to be just me and him and how do I increase my income so I can take care of the both of us. In that season, as I mentioned earlier, of just being reflective and what do I want in my life, I realize finances is a big part of how I'm going to get the life that I want. And I had started

looking at how to budget. I started putting away money before I got divorce as well into a savings account just so that I wasn't leaving at zero. Would you have any advice for anyone that's just being to navigate a divorce, Elizabeth? Oh my gosh. Wow. One of the last things we spoke about is really important because it can go two ways. You can go in panic mode like me and like, well, how am I going to afford my new life and how am I going to save and you can start saving aggressively or it's a really, really, really difficult period and you can end up spending a lot. And I think I spoke to someone recently who went that way and they even got a divorce settlement and blew it all because they were just, you know, trying to deal with the emotions of the divorce. So find a really good support system

to help you so that you're not using money as an outlet. It's really hard because you're grieving, but try to use the excitement of the new life that you're going to build as an anchor. And don't be too hard on yourself if you feel behind financially. I like that note about finding your support system. That can be really challenging, especially if you lose your friends in a divorce, which happens oftentimes. So that can be a whole new area where you have to develop your relationships, your community. And so spending money can be a really tempting outlet. But to the extent you can just try to rely on the people that are around you so that you don't end up making risky, maybe self-destructive financial moves. Yes. And I joined a divorce support group on Facebook.

y'all know I love a Facebook group. And honestly, it was so helpful. Just hearing everyone else's stories, people posting questions about finances, how to deal with the emotional side of things, really, really helped. Because I didn't have any friends going through a divorce at the time. So honestly, they were limited in the ways they could support me. But finding outside communities was helpful. Kim, do you have any final thoughts around how people can manage the financial aspect of this?

My biggest final thought is just reiterating that it's so helpful if you're going into a big life transition like a divorce, already being engaged with, okay, where is my money? What are my assets? Where are my liabilities? If you can answer all of that quickly because you've been thinking about it, it just puts you in a better position to handle any kind of big life change. Right. Well, Kim, thank you so much for coming on and talking with us. Thank you for having me. Elizabeth, we just talked about a huge life change that upends your finances. I want to talk about ones that we've been through that are maybe a little bit less chaotic. And one that I've been reflecting on recently is how eight years ago, when I moved to Portland, my financial life changed entirely, in large part, just because of one expense, and that was my

housing payment. I went from paying around $2,200 for a 600 square foot apartment to half of that for an apartment that was twice the size. And so that enabled me to do so many things that I simply couldn't do in San Francisco, like save money or invest for my future ahead and get a dog. And to me, that really underscores how you can have a big change in your life. that has just dramatic effects across the spectrum of your finances, where for me, I'd always tried to save in San Francisco, and it simply wasn't really attainable in part because of my lifestyle, but also just money is tight there. And now, eight years down the road, I've been able to invest that entire time. And I just feel so much more secure and really grateful for that

big change that I experienced. That's such a huge thing you say. And the other day when I was going through my budget and just updating my expenses, I was like, man, your housing does take a big chunk of your income, doesn't it? I moved from Florida to Texas and maybe my rent increased, but I don't know, $100, $150, but I have twice the space. And I thought to myself, if I had the opportunity to cut my rent in half, would I, of course. But if it meant downsizing and having less space than I have now, honestly, I wouldn't. You're paying for quality of life there. Yes, there's something to be said about, you know, where you can cut expenses due. But sometimes if it's going to eat into, like you said, your quality of life or it brings you joy and you can afford it and are not

swimming in debt, then hey, sometimes you just pay a little extra for comfort. But I love the fact that you were able to save so much money just by moving cities. And I remember my sister and my dad were both complaining about the expenses in Florida and the housing costs. And I'm like, there is always the option. Well, not always, but sometimes if you can move to somewhere with cheaper cost of living. Right. And now we're at the point where my husband bought a house. I've bought a house. And surprisingly, we're still paying less for our mortgages than we were paying in San Francisco. And then you got the nice outdoors, you got the weather, the views, you got all the things. The mountains, everything. I love it here. Before we go, a little bit of housekeeping to close this out. In a previous episode, I gave my personal opinion on national debt relief and debt settlement as a whole, which is that I think that there are less risky options for consumers dealing with significant debt. But I didn't mention that. Just like with every financial product or service, everyone's circumstances are different. And for some people, debt settlement could turn out to be the option they prefer.

That's right, and we always want to give our listeners access to all the options, so we're going to link our roundup of best debt settlement companies in today's episode description. That roundup is backed by comprehensive research and vetting by our lending team who determined which companies could be best for you if debt settlement is the right choice in your situation. National debt relief appears in that roundup, and while they are a nerd wallet partner that does not influence how we discuss or report on them. We also reached out to National Debt Relief for their comment on our listener's question, which we should have done initially when we were answering the question. They also provided us with more information about their services, and we'll link to their website if you want to learn more about them. And that's all we have for this episode.

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