Regardless of how affluent a married couple is, there is often a great deal of worry about the financial future. As financial planners who have specialized in working with, three concerns have emerged as most common. While some degree of worry and apprehension is to be expected, with a little work and planning, these three common divorce concerns can be eliminated and can help the out spouse feel more confident and secure:
1. Worry of not getting a fair share. If your finances are simple, it can be easy to evenly divide the assets, but if your finances are more complex (e.g., multiple homes, employer stock options, closely-held business, illiquid investments, separate property), this can become much more difficult. The solution is to answer these two questions: What do we own and what is it worth? If you are concerned that assets are not being disclosed, discuss this with your attorney and consider hiring a forensic accountant – basically a financial detective – to help uncover any undisclosed assets. The next issue is to arrive at a fair value for each asset. This is an area that is ripe for abuse.
2. Concern of not knowing what you’ll have. This is a pervasive worry . . . and it’s completely justified! In a divorce, it is easy to get lost in the details and lose sight of the bigger picture. It’s critical to stay focused on what your finances will look like post-divorce. This starts by knowing not only how much you have, but WHAT you have and WHERE you will have it. For example, $600,000 equity in your house is very different from $600,000 of cash in the bank or $600,000 worth of stock in your ex-spouse’s business. Get rid of the concern by getting clear on your assets. When working with clients, we make sure you are not only getting your fair share, but that you don’t get stuck with illiquid assets while your ex gets the cash.
3. The average length of divorce proceedings in the United States is 1 year.
Worry of not knowing how your lifestyle will change. This concern comes down to cash flow. After alimony, child support, employment income, investment income, and basic living expenses, how much will I have left? How much house can I afford? Can I still take trips twice a year? Do I have to fly coach now? These are real concerns that keep many soon-to-be divorcees up at night. To help squash this concern, we create a very simple post-divorce income and expense report for you so you can quickly see how your new finances will affect your lifestyle. We also map out not only what you can afford, but provide an investment plan to help you can get the most from your assets.z
It’s common and natural to experience a wide range of emotions – from worry to excitement to anger to contentment – when going through a divorce. For the out spouse that isn’t as financially savvy or who wasn’t involved in the couple’s finances, worry and uncertainty regarding money are all too common, but with some planning and us on your side, we can help you to feel more confident and secure about your future and your finances.
Raymond James and its advisors do not offer legal advice. You should discuss any legal matters with the appropriate professional. Any opinions are those of Financial Consulting Group and not necessarily those of RJFS or Raymond James.