How to Prepare Financially for Divorce
Divorce is of course stressful emotionally, but also financially. We know that it is a difficult time to be making decisions regarding your financial future. But the fact remains that there are many financial issues to be resolved before your divorce settlement is complete and you can start your next life chapter.
If you are considering divorce, financial questions may be swirling through your mind:
How do we separate our money?
Will the kids be okay?
Will I still be able to retire?
Where do we even start?
As a Certified Divorce Financial Analyst (CDFA) since 2010, I now have over a decade of experience and manage a team helping clients navigate the financial aspects of divorce.
Why Financial Planning in the Context of Divorce is So Important
It is incredibly important to carefully consider the financial issues at hand for several reasons:
Divorce settlements are final. Occasionally, adjustments to support are made due to changes in income, but once the agreement is filed and accepted by the court, changes are rarely made.
Poor planning can cost you. For example, it could cause loss of tax benefits like the real estate capital gains exclusion, or cost you an unnecessary early withdrawal penalty from a retirement account. [link to retirement article]
There could be unintended consequences. An “equal” division of assets on the surface could be much less equal, after consideration of taxes and liquidity.
Attorneys are not financial experts. Your attorney may be leading you through the process, but keep in mind that his or her specialty is the law. Attorneys are not financial experts and may be uncomfortable making financial recommendations.
Two households are more expensive than one, and the process itself can be very costly. There are many financial implications, which are not always fully understood by the divorcing couple, so it is important to design an agreement that will work for everyone involved.
Awareness of the issues can help couples reach the best settlement and avoid common mistakes.
Key Financial Issues for Your Divorce
There are too many issues to cover in one blog post, so I have broken it up into several. Please click the links below to read the articles in the series.
Budgeting & Divorce
Retirement & Divorce
Real Estate & Divorce
Executive Benefits & Divorce
How is Child Support Calculated?
How is Alimony Calculated?
Tax Issues & Divorce
As a Certified Divorce Financial Analyst (CDFA), part of our business is providing financial advice to individuals and couples going through divorce. Clients tend to find us online or may be referred by their attorneys, mediators or accountants.
We really love this work because it’s good to feel needed! Helping our clients avoid financial mistakes at a difficult time, and move forward with a plan that provides some sense of order and security.
When reading this series, please keep in mind:
We are not attorneys and do not provide legal advice.
We are not accountants and do not provide tax advice or prepare tax returns.
I am based in New York, and any examples or links I provide may not apply in your state.
If you or someone you know is considering divorce, please keep reading! And if you are considering hiring a Certified Divorce Financial Analyst, please schedule a free call with Sara Stanich, Liz Sylvan or Nannette Kamien to discuss your situation.
Please note, changes in tax laws may occur at any time and could have substantial impact upon each person’s situation. You should discuss tax or legal matters with the appropriate professional.
Resources
Please note, changes in tax laws may occur at any time and could have substantial impact upon each person’s situation. You should discuss tax or legal matters with the appropriate professional.
