Sometimes a marriage simply doesn’t work out. It’s a common story, so if this scenario sounds familiar, you are not alone.
Let’s use Susie and Joe Smith as a hypothetical example. They had been happily married for 32 years, raising two children and anxiously anticipating the arrival of their first grandchild. As a successful dentist, Joe provided a comfortable life for their family. This afforded Susie the opportunity to stay home with the children while they were growing up, and she loved being involved with all their activities as well as being the center of the family.
One day Joe came home from work and made an abrupt and life-altering announcement: “Susie, I want a divorce.”
After Susie picked herself up off the floor, her mind started racing with questions. “How did it reach this point? Is there someone else? How could he do this to me and our family?”
Soon the initial shock wore off, and Susie started thinking about her finances, wondering how she was going to make it on her own. She thought about her decision to step back from her own career decades ago to raise their children. She had always relied on Joe to make financial decisions for their family, and now she felt vulnerable and alone. What should she do first? Where could she turn for help?
If this story resonates with you, please take a moment to familiarize yourself with these important tips, prepared by the Certified Divorce Financial Analyst (CDFA®) professionals at Allegiant Private Advisors:
- Take financial inventory of everything, whether owned individually or jointly.
- Make copies of account statements so you know the account numbers, how the accounts are titled, and where each account is.
- The same goes for debt: credit cards, lines of credit, car loans, mortgages, etc.
- Secure all recent tax returns and pay stubs to determine income amounts and sources.
- Spend time creating a realistic budget for expenses that you have now and those that you will have after the divorce.
- All of this information will be used to create the financial affidavit, a document required by courts which is used to calculate spousal and child support, if applicable. It will also be used to determine an equitable distribution of assets and liabilities between the divorcing spouses.
- Make sure you have your own credit profile. Get a copy of your credit report and make sure it’s accurate. If necessary, open a new credit card account before you get too far into the separation process. This will build your own credit rating before the divorce is finalized.
- Schedule a meeting with your estate planning attorney to update the beneficiaries on your life insurance and retirement accounts. You’ll also want to change your power of attorney and healthcare directive documents since these typically name your soon-to-be ex-spouse.
When faced with a divorce, it can be hard to think rationally. Having a “thinking partner” like Allegiant Private Advisors can be extremely valuable. It’s also important to take care of yourself, perhaps by seeing a licensed therapist in addition to seeking the advice of your friends.
It’s vital to consider how your life will be different and what you can do to set yourself up for success. Talking to a CERTIFIED FINANCIAL PLANNERTM professional is also a good idea, as they can provide objective financial advice, guide you through the divorce process and be your trusted fiduciary advisor. A good advisor can help establish your individual plan for achieving your financial goals and securing your independence.
In a recent article published by ThinkAdvisor, Allegiant Wealth Advisor Michelle Cross, CFP®, CPA, CDFA®, also explained a relatively new approach for couples that are seeking a better process: Collaborative Divorce.
By exploring the collaborative divorce path, the Allegiant team has found that clients often avoid a contentious separation, helping to preserve family relationships and wealth through an undoubtably challenging transition.
However, often times a divorce is combative and leads to a financially stressful process, despite best efforts to stay amicable. Either way, following the to-do list above can be extremely helpful.
Allegiant Private Advisors can help. There’s no need to go it alone.
Allegiant Private Advisors is located at 240 South Pineapple Ave., Suite 200, Sarasota, FL 34236. For more information, call 941-365-3745 or visit allegiantpa.com. Advisory Services offered through Commonwealth Financial Network, a Registered Investment Adviser.