“Finances Interrupted” Divorce is Difficult Transition | Dianne W. Nolin, CFP

Divorce is a difficult transition for a family to undergo and women are disproportionately affected.

Separating or divorcing couples face major financial adjustments. Switching from a dual-income to a single-income household brings many financial challenges, with the biggest adjustment for women, who are likely to experience as much as a 30% decline in income.

It’s not uncommon for one party in the family to manage the finances. Only 35% of women considered themselves the primary manager of finances for their households. This leaves women feeling vulnerable when negotiating their financial future. When emotions run high, people tend to make financial mistakes.

After a divorce, most women become solely responsible for their earnings, savings, and retirement planning. This makes financial planning a critical step in the divorce process, especially during the construction of the settlement agreement.

Enter the divorce financial planner… Typically, if financial planning takes place at all, it’s after the divorce, when financial planners help individuals take stock of their finances and move forward.

Divorce financial planning, however, takes place at the start of the process, when individuals first choose to go their separate ways. With early entry into the process, divorce financial planners can provide the comprehensive and accurate financial information necessary to reach a workable financial agreement.

Uniquely qualified to make long-term financial projections, divorce financial planners integrate the methodology of financial planning directly into the divorce process. Since settlements are in large part financial, divorce financial planners can explain options, help set priorities and lead a client through the difficult choices and trade-offs ahead.

Below is a checklist for organizing yourself and your finances to arrive at reasonable outcome: Gain a clear understanding of the current financial picture:

  • Discuss and Prioritize Goals
  • Create a New Household Budget

Gain a clear understanding of the future financial picture:

  • Estimate Future Earning Potentials
  • Estimate Spousal Support Needs
  • Estimate Career Training Cost and Time Horizon
  • Project Retirement Needs
  • Analyze Insurance Needs

Focus on negotiating a fair and workable settlement:

  • Minimize taxes and expenses
  • Maximize marital assets
  • Compare After-Tax Asset Sales
  • Look at After-Tax Proposed Settlements
  • Compare and Contrast Settlement Proposals
  • Develop Alternate Settlement Proposals
  • Understand the Division of Property

Divorce financial planning increases the accuracy of financial information so that both parties achieve workable settlements quicker and accept realistic lifestyle changes when necessary. Financial settlements achieved with the help of a financial planner are less prone to problem or error. Some say marriage is about love and divorce is about money. Certainly, a divorce has long-ranging financial implications. To minimize the “interruption”, empower yourself with preparation, financial education and sound advice from disciplined professionals uniquely qualified to support you throughout the process.

Brenda Blisk, CFP® CEO of Blisk Financial Group | Senior Vice President of Spire Investment Partners
Office: 703-748-5800 ext. 5823
Toll-Free: 800-262-3458
Fax: 703-748-1372
Brenda.Blisk@spireip.com

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