Divorce is likely one of the most painful life transitions people will face. It often involves feelings of anger, guilt, fear, anxiety and grief. As a Certified Divorce Financial Analyst, I am trained to help consult and advice on the financial issues and decisions people must address and resolve through the divorce process. You don't get a "do over" so you have to get it right.
Below I share a list of questions folks preparing to divorce should ask themselves:
- What do I owe? Credit card, loans, mortgages
- What assets do I own? Includes bank accounts, investment and retirement accounts as well as 529 plans for children. What do you own separately and together?
- What is most important to me? Keeping the family home? Understood, but can you afford it long term if it means giving up assets you need for income now or retirement later on?
- What can I live without? You will not get everything you want and neither will your spouse. Accepting that early on will help you decide what is truly important and likely save you money in attorney's fees.
- What sort of child custody arrangement and support is likely? Make sure you know what your children's expenses are currently and likely to be in the future so you can accurately account for them in the divorce settlement. And, don't forget about college costs/expenses.
- Can I expect to receive spousal support? If so, protect this valuable income stream with a life insurance policy on your ex's life (he is the insured) that you own and are beneficiary too (you control it). You could account for the cost of this in the settlement.
- How would I describe my financial situation? Most folks will not be able to maintain their pre-divorce lifestyle after divorce. What can you compromise on, spend less on, etc.?
- Do you have a "dream team"? This is comprised of a family law attorney, a therapist and a qualified financial advisor. Each one of us has an important job to do on your behalf so use each of us in the appropriate manner. The attorney is likely 3 times as expensive as your therapist so best not to use your time with your attorney as a therapy session.
Frequently, affluent women come to my practice for help with divorce settlement planning. They are, on average, in their 50's, and they are vulnerable and afraid. To their detriment, they often "play" too nice and accept less in an effort to make everyone happy. I see it time and time again and I strongly advise against it. You do not get a "do over". The decisions you make during the divorce process are permanent and can have financial consequences for the rest of your life. If not done right, they may haunt you.