Financial Planning During Divorce
Proper financial planning during divorce is crucial to protect what’s yours and stay focused on what matters. Here are 10 tips to approaching divorce with financial savvy.
At Vance Wealth, we’ve sat with clients as they approach some of the most challenging turning points of their lives. When it comes to divorce, one of the things that scares people the most is the uncertainty and loss of control. That’s why we work as advocates for our clients. We help them plan for and through their divorce, so they can regain the control they felt was lost — and see the future more clearly than ever before.
If you’re considering divorce or in the middle of one, it’s completely possible to come out on the other side of this with a solid financial foundation, a workable solution, and even some grace. Here are our top 10 tips to tackle divorce with financial savvy.
1. Have cash reserves.
Cash gives you power and independence, yet divorce is a cash-hungry business. Secure your sources of cash. When it comes to credit cards and IRA withdrawals, proceed with caution because they can become costly.
2. Be prepared.
There are two main rules when getting prepared for a divorce: 1) Look before you leap, and 2) Document everything. Review all your bank statements, assets, debts, credit reports and other financial information, to get a clear picture of where you stand now. Document and copy all of it.
3. Remain realistic.
You’re entitled to 50% of marital assets. Focus on finding a manageable solution to move forward. Learn as much as you can about your finances and the legal process ahead, but don’t waste your time searching for every single penny.
4. Count all assets.
Inventory everything you’re entitled to, including: frequent flyer points, credit card rewards, accumulated vacation and sick pay, business assets, retirement and pension plans, artwork or other collections, separate property, safe deposit boxes and more.
5. Consider tax consequences.
Make sure you consider all tax consequences. This may require a professional, as hidden taxes can be found within your real estate, highly depreciated rental property or retirement plans. Be careful liquidating assets hastily as you might have unintended tax liabilities.
6. Sideline your emotions.
Once you’ve done your due diligence, it’s time to firm up your mindset as you go into this emotionally charged process. Do everything you need to take care of yourself emotionally, but when you’re sitting with your professionals, focus on moving forward — if for no other reason than it’s really expensive to vent your feelings to your attorney. Be mindful of extremes, such as surrendering what’s owed to you because you feel powerless, or trying to “win” the divorce as a form of payback. This is about securing your future. Stay focused on the best possible solution.
7. Protect what’s yours.
While you want to work toward a solution, you also want to make sure you’re protecting your foundation. Figure out what you need to be ok — and don’t underestimate that number. When it comes to protecting what’s yours, you’ll know how to stand your ground and when to acquiesce.
8. Take control.
No one is going to care as much about your future as you do. Say it again if you have to, because it needs to underscore everything you do in this process — from taking control of your accounts and investments to protecting your spousal support with life insurance. Make sure you know your income streams are protected.
9. Build a team.
We recommend starting with an attorney, financial planner, accountant and therapist. You may also want to consider hiring a forensic accountant or a Qualified Domestic Relations Order (QDRO) Specialist. Choose people you identify or connect with.
10. Plan your future.
Start thinking about what your new financial future could look like, and don’t stop planning once you’ve gotten through the worst of it. Keep the momentum going, and gain even greater control of your financial picture. Set financial goals. Create a new budget. Consider a move. But most importantly, don’t forget you can always rely on your team.
We’re here for life’s biggest moments, even the tough ones. Let us see you through this. To set up a consultation with one of our Wealth Advisors or our Certified Divorce Financial Analyst™, please call Tara White at 888-775-0950.
Vance Wealth and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.