Financial Advisors Can Help You through Divorce
Divorcing couples usually engage attorneys and mediators, but what about financial advisors? An advisor specializing in divorce can help make sound financial decisions.
Getting divorced is never easy. Here are some common questions that people think about when divorcing:
- Am I going to be okay financially?
- Can I afford to stay in my home?
- Can I still retire on time?
- How will the kids’ education be paid for?
When entering into a divorce, many people assemble a team of attorneys, mediators and therapists to guide them through the process. And while it’s often important to have all of these professionals as a part of the divorce team, one frequently overlooked team member is the financial advisor. Although, at its core, divorce is a legal process, much of the focus will be on the division of financial assets. How these assets are divided will often determine a person’s lifestyle, retirement and financial goals for many years after the divorce. In our view, it’s important to consider using a financial advisor, specifically a certified divorce financial analyst (CDFA® professional), to help make crucial financial decisions.
Three ways a divorce financial advisor can help
1. Getting organized
A financial advisor trained in divorce can wade through and evaluate the stacks of statements, bills and tax paperwork in order to help organize the information for the divorce. They can also build a marital balance sheet and help fill out the legal documentation for the state that will be needed to file the divorce.
2. Divorce financial planning
As negotiations between spouses are discussed, a CDFA professional can run projections based on the discussed proposals. For example, what is the best option: taking a monthly maintenance/alimony payment or settling on a lump sum figure in lieu of ongoing payments? Sometimes, Monte Carlo analyses can be run to arrive at the best outcome possible.
3. Education
To make sound decisions during divorce proceedings, one should be sufficiently informed about the specific issues at hand. Whether deciding what to do with the marital home, planning for kids’ expenses or understanding the tax implications of the assets that will be received or divested, it’s important to have a good understanding of each issue in order to engage in informed negotiations. A divorce financial advisor will take the time to educate their clients and help give them confidence in the process.
Finding an ally in a financial advisor
Divorce is often a difficult process with many highs and lows. With the resources available, we believe one should not feel they need to go it alone. A divorce financial advisor will help navigate this process so people can be supported during a challenging time and feel confident in their decisions. Perhaps even more importantly, working with a financial advisor is a relationship that can extend after the divorce to help ensure success in the next chapter of financial decisions.
ABOUT THE AUTHOR
Jenny Chung
Jenny is an Associate Partner, Wealth Advisor in our Itasca, IL, office. She uses her background as a teacher to help individuals and families feel comfortable with their investments and planning. She also works in the firm’s Divorce Practice Group, which helps divorcing individuals navigate the process and works closely with them afterward to help them build a full life.
