Financial Planning During Divorce

hidden assets divorce

Too often, spouses during a divorce think of the immediate present when dealing with finances – what do I need to pay my bills now? What property do I want now? But the decisions made in dividing assets cannot be undone after divorce – they are final. Consequently, parties to divorce should give much more thought to the long-term impact of any division of assets.

In an interesting article in Forbes, the author highlights four steps to protect oneself during divorce with regard to division of assets, and we thought we would share these insights.

First, speak with a financial planner. Your financial future at stake, you should take the time to meet with an expert on long-term planning and the tax implications of different divisions of assets. You may not even realize the loss or gain associated with a particular asset allocation – a financial planner can paint you an accurate picture of your options.

Second, do not rush to make a property settlement. As we have said in this blog many times before, hasty or impulsive decisions often lead to regret. You may want a divorce to end but it should not come at your financial well-being. You do not want to give up an important retirement asset, for example, particularly if you have little savings of your own. Or you may think twice about asking for the marital home when you analyze how much that limits your monthly budget.

Third, you should leave the divorce with a concrete financial plan. A divorce will change your economic future; how you covered expenses and saved for retirement are different and you need to plan for these new realities. You not only want to live within your means, you want to still have the ability to save. Starting fresh will give you a chance to think of essentials first and build up from that point, measuring the choice of a “now” item versus long-term investments.

Finally, leave yourself some wiggle room in the first year post-divorce. You have not lived in these new circumstances before, and it may take time and some trial-and-error to come up with right mix of income and expenses that fits your lifestyle and financial goals.

Remember – divorce upends your assumptions you made about income and expenses for you and your family. In order to make informed and smart choices for life after divorce, take the time and gather the expertise needed to assure your financial future will be sound.

If you have questions about financial planning and divorce, contact us – we can help.