by Maryann Keith, CFP®, CIMA®, CDFA®
Over the years, I’ve worked with many clients who reached out long after their divorce was finalized. I always wish they had come to me sooner. Divorce is never easy—it’s expensive, time-consuming, and emotionally draining. The idea of adding the cost of a financial planner, attending extra meetings, and juggling more decisions can feel overwhelming during such a stressful time.
There are many advantages to working with a financial planner during the process that can have a huge impact on your financial outcome post-divorce. Working with a financial professional can help bring you clarity. More specifically, this type of work can help you with the following:
Get a window into your future – Let’s face it, when you’re meeting with your divorce attorney, there are many scenarios to consider. You may want to keep the marital home in exchange for fewer liquid assets, but could that increase your risk of running out of money later in life? Reviewing a cash flow analysis can show you projections of the short-term and long-term ramifications of your proposed settlement.
Dig into the details – All too often, I work with clients who are being offered a settlement that truly isn’t equitable. For example, in the case of compensating a spouse for home equity, I often see offers of giving the receiving spouse pre-tax dollars from a retirement plan in exchange for the marital home. This can often be disadvantageous for the receiving spouse as one dollar of home equity (an after-tax asset) does not equal one dollar of pre-tax retirement funds. In addition to a litany of tax planning considerations, accepting pre-tax dollars in exchange for home equity creates many more complex considerations such as the effect on health care subsidies or Medicare premiums if funds are withdrawn as part of the QDRO (Qualified domestic Relations Order) process.
Make changes now – Your financial planner can’t magically make your divorce settlement larger, but they can help you optimize what your attorney is able to negotiate for you. Perhaps you’re in a situation where you’ve been working part time. A financial professional can show you the long-term impacts on your finances of continuing to work part time versus working full time. For example, assume your projections show you running out of money at age 75 if you don’t make any changes. Making life changes on top of a divorce isn’t easy, but being informed gives you power. The data you receive from a financial plan is incredibly valuable in your decision making process on how to move forward financially.
Reduce uncertainty – Numbers don’t lie. You may not like the projections your financial advisor provides, but understanding where you stand and grounding yourself in reality is empowering. In general, humans fear uncertainty. A detailed financial plan can help take away some of the anxiety that comes with that uncertainty.
Life can be good again after divorce, it will just look different. Beden Wealth is here to help you navigate that transition with confidence through expert divorce financial planning.
*Neither MML Investors Services, LLC nor any of its subsidiaries, employees or representatives are authorized to give legal or tax advice. Consult your own personal attorney legal or tax counsel for advice on specific legal and tax matters.
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