Financial Planning in the Event of Divorce
Posted: 3-8-22 | Innovia Wealth
One life event that can be devastating, both personally and professionally, is divorce. As a society we often consider the negative effects divorce can have on our personal lives, but it can also be extremely destructive to a couple’s net worth and to their future financial outcomes as individuals. This is why, if you are divorcing or contemplating divorce, you should involve a financial advisor and an accountant as part of your professional team.
Divorce Is Difficult
At Strategies Wealth Advisors it’s our mission to help our clients achieve their goals by managing their assets, protecting their wealth, and maintaining their legacy. The people we work with are motivated and future thinking. Unfortunately, not everything in the future can be predicted.
When people go through the process of divorce, they are often too distracted to consider things that seem far down the line – things like wills, trusts, and retirement accounts. However, ignoring them will not make their future financial situation better, and it often makes it far, far worse. The damage can last years or even decades.
How a Financial Advisor Can Help During a Divorce
When people consider separating from their spouse, they immediately think of obtaining legal counsel. A financial advisor can be just as helpful, although in a different way. A financial advisor can help you examine your lifestyle and expenses before and after a divorce. For spouses who have been less involved in budgeting, paying bills, managing investments, and buying insurance, this help can be invaluable in ensuring a comfortable lifestyle moving forward.
Financial advisors can also help discover or evaluate the financial assets that you and your spouse have in common like real estate, antiques, bank and retirement accounts, and college savings accounts, as well as deal with established legal contracts like trusts.
Financial Goals Post-Divorce
Common goals people have after a divorce are:
- Saving for a comfortable retirement
- Purchasing a new home
- Rebuilding wealth through investments
- Ensuring their children’s education and future
These goals can be harder to achieve after a divorce. There are tax implications to separating assets, and the individuals’ may find themselves in a higher tax bracket post-divorce. They may have to establish credit in their own names. Splitting retirement accounts can be difficult as well and can trigger tax penalties.
It is difficult to make good decisions about what to do during a life changing event like a divorce. This is why it’s so important to surround yourself with knowledgeable professionals who can be objective and work with you to help you define your needs and then position yourself to achieve your goals as a single person.
Most people hope to live long, meaningful, enjoyable lives and leave behind something to benefit their community and loved ones. A divorce can interfere with that, but it doesn’t have to ruin it. Long-term financial planning will allow you to realize the financial stability you deserve. If you are concerned about how your financial health will be affected by a divorce, contact us at Strategies Wealth Advisors. We are ready to help.