Divorce hits close to home for me. When I was six-years-old my father left my mother to raise my four siblings and me. Our lives and our finances were turned upside down overnight. I witnessed firsthand what can happen without proper guidance and planning. As a result of my personal experience, I am a passionate divorce financial planner and proponent of building a team of experts who can help navigate the often unchartered, confusing and emotionally laden waters of divorce.
I recently pinged the Certified Divorce Financial Analyst (CDFA) LinkedIn group asking for their best Twitter-sized financial divorce tips. Here are some of the best financial divorce tips from advisors who are in the trenches day in and day out:
Investments, such as mutual funds, bonds, stocks, real estate -- are all taxed differently when sold. Splitting them 50/50 "in kind" at today's value does not mean same tax consequence in the future, especially with different marginal tax rates of the spouses. Adjusting financial split for future tax liability is a great way to insure fair division of assets.
Many going through a divorce should consider mediation or collaborative law before going to court -- especially if there is a substantial amount of property to divide. In these situations, the parties have a voice in the matter and can craft their own solution/outcome whereas the court will have a third party (judge) making the decision for them. Mediation or Collaboration isn't for everyone, yet it is under-utilized to a great degree.
Stacey Lau Welsh:
Too often, individuals fail to focus on their financial lives post-split. You need to know where you're going to know how to get there.
Steve Durant Pontiff:
Death of a child is the only life event more challenging to your soul than divorce. I encourage anyone facing divorce to seek help from empathetic, compassionate and experienced professionals in the financial, accounting and legal areas as well as in the spiritual and mental health fields. Don't, "go it alone".
I encourage my divorcing clients that they need to have a clear understanding of their financial situation: What they own, what they owe and how each item is titled. They need to realize that an equitable split of the marital estate will be beneficial to both parties and working toward that goal in the most cooperative fashion will save time and money. It is critical to evaluate the short and long-term financial impact of a proposed settlement to determine how it will look for both parties. In addition, I encourage alternative methods of divorce such as, mediation and collaborative divorce. A long drawn out litigated divorce is a lose-lose situation.
Please consider discussing how a collaborative approach to divorce through the Collaborative Divorce Association could help mitigate some of the resentment, backlash and lasting damage to children's relationships with either or both parents.
It is essential to surround yourself with qualified professionals to guide you through the process. Divorcing individuals need to make numerous legal and financial decisions amidst a myriad of emotional stress. Obtaining the proper guidance from qualified advisors will enable people dealing with this life event to emerge from the process at a new beginning to an optimal post-divorce life.
Focus on life as a single person. Make a financial life plan for the first one to three years. Know what you need for the best possible life after divorce. Settle accordingly.
Diane P. Bell:
Build Your Team:
• Legal: Find an affordable, well qualified, divorce attorney to counsel you regarding your legal questions and rights.
• Financial: Find an experienced Certified Divorce Financial Analyst to assist you with the financial details.
• Emotional: Find a skilled divorce counselor to help you deal with the emotional roller-coaster you are about to undergo.
Have you gone through a divorce? What is your best financial divorce tips for those thinking about or going through one?