Do you feel confident about your post-divorce financial future?

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Marriage is about Love.
Divorce is about Money.

Going through a divorce will force you to make the biggest financial decisions of your entire life - at a time when you may feel the least capable of doing so.

When you are in such extremely difficult circumstances, it is normal to question your ability to make even the smallest decisions. Or you may not be accustomed to making financial decisions. Even among the best of us, the emotionalism of divorce may cloud your good judgment. Whatever the case, you need help and you need it now.

The divorce process, and the professional assistance you need, is like a three-legged stool. You need professional legal, financial, and emotional advice and support. If one of the legs is missing, just like on the stool, you will fall and get hurt. Do not expect your divorce attorney to do it all. He or she is trained in the law and is not a financial expert or a therapist.

Your divorce team should include a financial professional, along with your divorce attorney and personal counselor. The best type of financial expert is an experienced financial services professional who regularly works with, and understands, the types of assets, accounts, and financial instruments you may have in your marital estate. In addition, they will have additional specialized training and certification in the divorce specialty, such as the  Certified Divorce Financial Analyst™ (CDFA™) designation. I have been recognized as the first Divorce Financial Professional in the Nation to have been awarded three different certifications in this specialty. As your divorce financial expert, I will work closely with you and your divorce attorney during the negotiation of your Marital Dissolution Agreement, or "Settlement"

As your divorce financial expert, I first look at the marital assets belonging to you and your spouse in the traditional way. Consideration is given to an itemized list of real estate owned, household goods, vehicles, debts, investments, retirement accounts and pensions, family businesses, and the like. Additionally, the income and projected living expenses for each of you will be weighed. The intent is to divide the property as equitably as possible and plan for any appropriate child and/or spousal support.

But I don't stop there. I will examine the long term effects that a proposed property/support settlement has upon your future financial well-being. This is necessary because different assets, which may have equal value today, may be projected to behave differently and have vastly different values in the future. For example, a house worth $500,000, with $300,000 equity, will likely appreciate at about 1-3% per year and require maintenance and taxes to be paid in the meantime. On the other hand, a retirement account worth $300,000 may grow at about 6-8% per year and require no expenditures in the meantime. Huge difference, although today they both have the same net value and may be perceived as an equal division of property.

In addition, my analysis will consider factors such as: impact of inflation upon living expenses, different tax brackets of the parties as single individuals, special tax issues specific to divorce, present value of pensions, stock options, deferred income, replacement of insurances, cost basis and performance of individual investments, alimony and child support, possible buyouts and their overall impact, and more. My additional credentials of Certified Fraud Examiner (CFE) and Master Analyst in Financial Forersics (MAFF) also enable me to identify possible indications of hidden assets or misleading documentation.

A professional analysis will illustrate exactly what the impact of a proposed settlement will have upon your Cash Flow for each of the next 10, 15, or 20 years. It will also project your resulting Net Worth for each of those years. These are the things that are really important for you to maintain a dignified lifestyle. The benefit is that you will know in advance what the consequences may be of a settlement that seems equal now, but may not be at all equitable in the long run. Based upon those results, I will then develop alternative settlements for consideration by you and your divorce attorney.

With the support of a divorce financial expert, you will be able to make more informed decisions regarding your divorce settlement and take better control of your financial future.



Rosemary Frank is not an attorney and does not provide legal advice.

©2008-2015 Financial Advantage, Inc. Educational purposes only. No financial, legal or tax advice provided.


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Thursday, 26 March 2015

Whether or not to keep the house may be one of the greatest decisions you need to make during your divorce. Think of it this way, that house was purchased under different circumstances:  for two adults and now there will be one; with greater household income and now there will be less; when you had someone helping with the upkeep and now you will need to pay for more services. It usually does not make good financial sense to keep that house. Your new financial situation will indicate new appropriate housing.

For those who seem willing to jeopardize their future financial stability for the sake of keeping the children in the same house, neighborhood and schools, I would point out that it is not in your children's best interest to have you in financial peril and with all of the stress that comes with it. Further, if things were different, the marriage was in tact, life was wonderful, and you had the opportunity to move to a bigger, nicer, newer home, you wouldn't hesitate to move those kids to a new home, new neighborhood and new school. And you would feel realy good about it. So, re-examine this more objectively and make the decision that is in your, and your family's, best all-around financial interest. 

If the decision to move to new and different housing seems difficult, work through it with your therapist. I also encourage you to have the children speak with a child specialist to discuss all the changes to which they must adapt. Divorce is difficult, but doable, and there is a future to look forward to. You may soon find yourself grateful for the new surroundings and living environment as key to your new life post-divorce.

Posted on 03/26/2015 9:27 AM by Rosemary