WHY YOU NEED TO SEEK A FINANCIAL ADVISOR DURING A DIVORCE

Divorce is stressful. Not only do you have to worry about your emotional and mental well being, you also have to worry about your financial well being too.

During a divorce, you and your spouse will be forced to make and accept a myriad of major decisions that will affect you now and in the future. Those decisions can include children (if there are any), debts, property and taxes, to name a few.

While many people choose to consult a family law attorney in their divorce proceedings, too few engage the expertise of a financial advisor.

Below are some of the biggest financial concerns when it comes to divorce:

DIVIDING PROPERTY

When a marriage comes to an end, one of the first things most couples do is try and decide who gets what. How do you decide who gets what after years of accumulated belongings? You can of course have the courts decide it for you, which can be time consuming as well as expensive, or you can sit down with your ex and divy up the property yourselves or sell it and split the proceeds. There are nine (9) states that have community property laws, that state, all property acquired during the marriage is considered joint legal property.

DIVIDING DEBTS

This is a more difficult issue, as you both are deciding who owes what to whom while you were married. First thing is to order your own credit report from all three credit bureaus, Equifax, Experian and TransUnion. Your credit report breaks down everything you owe in your name, including joint accounts you share with your spouse. Go through them and decide which ones you owe solely and which ones are jointly owned. Cancel all joint accounts now to keep them from increasing. There are a number of things you can do to try and eliminate these:

If possible, pay off debts now. If you have savings or assets you can sell, this is the best method. You don’t have to worry that your spouse will leave you responsible for his/her portion of the debt, and you can start your new life debt-free.

Agree to take responsibility for the debts in exchange for receiving more assets from the division of your property.
Agree to let your spouse take responsibility for the debts in exchange for receiving more assets from the division of property.
Agree to share equal responsibility for the debt. Though this choice appears most “fair,” it does leave both of you the most vulnerable. Legally, you are still responsible if your ex-spouse doesn’t pay up, even if s/he signs an agreement taking responsibility for the debt.

TAX ISSUES

You may not even think of this issue until it’s too late and tax time is right around the corner. But the best piece of advice is to contact a CPA and go ahead and resolve any issues with he/she by deciding them now. You need to know if you’re going to be filing jointly but separated? Who’s going to file head of household? Who’s going to claim the dependents? These and many more questions can be answered by a CPA and can save you many headaches in the long run.

RETIREMENT PLAN ISSUES

If your spouse has a retirement savings plan, you may be entitled to some of that money. A financial advisor can help you determine what, if anything, you are owed from an ex’s retirement plan. It can be determined by how many years you may have been married to how much money you may have contributed yourself if the two of you had a joint retirement account.

Master Registered Financial Consultant and Best Selling Author Peter J. D’Arruda, also known as Coach Pete, discusses this in his book “7 Baby Steps to a Ridiculously Reliable Retirement Income”. In Step 5 Looking Ahead, Chapter Eleven, Planning for the Unexpected, Page 70-72, he talks about divorce and how it can have a “financial fallout…in later years”.

All of this is to say, you really need someone on your side to make sure you don’t get taken advantage of when it comes to divorce. You may be playing fair, but how do you know that your spouse is? You need Coach Pete and his team of fiduciaries on your side to look out for you and your best interests. Contact us now, and let us work for you.