It is common knowledge that going through a divorce is a trying time and can take a toll on your emotional and physical health. You may become unusually tired and not make the best financial decisions for your future. This is the main reason it is important to have a financial planner on your side along with your divorce lawyer. Financial planners can calculate and quantify your assets and long-term needs. They will not allow you to be fooled by hidden assets and burdened with hidden debt.
Working with a financial advisor during your divorce proceedings may help you make fully informed decisions about your financial future as well as save you money during the process. A divorce is also a financial transaction for which it is best to have professional advice. An advisor will help you create a realistic budget not only for the divorce proceedings but also for your future and educate you so you can better take care of your financial issues. Here are the top reasons a financial planner can help during your divorce:
Share the Assets Fairly
If one spouse has primary custody of the children, the spouse may request ownership of the home because of emotional attachment and continuity for the children. The other souse may take all the liquid assets. It may seem fair, but only a financial consultant on your side can determine if it is fair. One million dollar liquid assets may grow in value, but a one million dollar house needs repairs and maintenance, insurance payments and other upkeep costs. Even if both are currently worth one million dollars, the distribution is not fair.
Keep You on Track
Once you have chosen a financial advisor for your divorce proceedings, you should make it a point to listen to his or her advice. When litigation drags on, some people just want it to end and are ready to settle for less than they deserve. Your financial planner can take some of the day-to-day stress off you so you do not feel like giving up too soon. You can always give your spouse more in the future when the heat is off and the divorce is final, but you cannot get more. A professional divorce financial person will keep the big picture in mind for your benefit.
Other Financial Considerations
- You may need advice on how to assign beneficiaries on your life insurance policies, will and investments.
- If the divorce decree provides a payout, you may need help dealing with the qualified domestic relations order (QDRO).
- You may need help with the tax consequences of child or spousal support.
- You may need help handling your tax return according to the timing of your divorce.
- Also you may need help transferring the title of your home.
- You may need help creating a financial plan for your life as a single adult.
Some Pre-divorce Financial Advice
- Find a financial advisor
- Gather and make copies of all your monthly bank statements
- Gather and make copies of your tax returns whether filed separately or jointly
- Make sure all taxes have been paid
- Avoid making large purchases
- Separate any contents of a safety deposit box
- Give all documents to your lawyer and don’t sign anything away before the divorce
- Don’t move out of your home unless advised to by your lawyer
Even if you and your spouse already have a financial advisor whom you trust, during a divorce, it is important to have an advisor who is solely looking out for your interests. It may not be easy or even possible for one advisor to treat both parties fairly, and there is no point in taking the risk.
According to the experts, it is very common for people to regret they did not give more care to the distribution of assets during the divorce proceedings. If you believe divorce is in your future, finding your own financial advisor may be in your best interest before you even find a divorce lawyer. When there is a full understanding of all the assets and debts, a fair settlement is more likely than if one party is ignorant and the other party has hidden assets and debts.