Money Matters in Divorce: How a Financial Planner Can Make a Difference

Unsure of your joint financial position? A financial planner or certified divorce financial analyst can help you get organized for the future.
Cartoon character looking in book with a money sign on it.

As many married couples know, financial challenges can cause a lot of strife. Money has long been a taboo subject, so it’s not uncommon for partners to discover that their financial goals and money management styles in divorce are just as different as they were in marriage.

You may have different priorities and responsibilities to prepare for, which can make it difficult to agree on a division that is fair. Additionally, you’re not only dividing assets but trying to figure out how to maintain two households on the same budget you had for just one family home.

The good news is that there are financial professionals ready to assist you as you go through this difficult separation. Just as you rely on your lawyer for legal support and you turn to parenting solutions to develop positive parenting strategies, a financial planner can help to ensure that you emerge from your divorce with a bright financial future. What can a financial planner do for you?

Understand Your Financial Situation

When you enter the divorce process, you may struggle to fully understand your current financial situation, much less what it looks like moving forward. Many couples split duties when it comes to maintaining a household.

The major breadwinner might handle the finances, while a stay-at-home parent or a partner with a secondary income manages the day-to-day household duties. Perhaps you split finances down the middle or according to your salary. You might have shared or separate accounts.

As a result, you could enter the divorce process not fully understanding your joint financial situation. Finding yourself in this position can be scary at the best of times.  A certified divorce financial analyst (CDFA) like Jamie Lima can help you to get organized so you have a handle on your family finances, including income and expenditures, assets, investments, and so on.  

This will prepare you to tackle the division of assets during the divorce and plan for your personal finances after the fact. A financial professional can also help you account for legal fees, whether you decide to save money by working with a mediator or your contentious divorce ends up in a courtroom.

Finally, you may want to consider planning options like maintaining life insurance policies beyond marriage to cover lost income or labor like childcare if one parent passes away while your children are still young.

Determine a Fair and Equitable Division of Assets

There are amicable couples capable of coming to a fair arrangement for splitting assets on their own. However, it’s not uncommon to experience difficulty when it comes to deciding who will stay in a family home or if it’s better to sell certain assets and split the proceeds.

There can be a lot of emotion wrapped up in the places and items that formed the framework for your married life. It’s even more difficult when children are involved. You may rely heavily on professionals to assist you through this process.

A financial planner can help you in several ways. First and foremost, this professional can itemize your assets to make it easier to determine a fair and equitable solution for dividing them. 

If you’re struggling to decide whether to sell or keep a family home, you may need advice about what you can gain by selling or how your budget might benefit from staying in the home versus selling in poor market conditions.

Taxation can be another challenge during divorce, as you move from joint to separate tax filings. Financial planners can provide options to reduce taxation in the short- and long-term.

Finally, you need someone to advocate for your best interests. Your lawyer will handle this support on the legal front, but partnering with a qualified financial planner can ensure that you come up with a fair and favorable divorce settlement.

Coordinate With Other Professionals

When adults contemplate divorce, they often consider hiring a qualified attorney. You may not realize that there are a range of other professional services at your disposal.

For example, you might need to work with a trial prep consultant if your divorce lands in a courtroom. Some people find the services of a divorce and life coach incredibly helpful in sorting out goals for the divorce process and planning for a newly single life.

If you have children and you need help figuring out what co-parenting looks like in the aftermath of divorce, a parenting coordinator is the perfect option. You might also end up speaking with a range of other financial professionals, such as a CPA, bank representatives, a mortgage broker, and an estate planner.

A financial planner can coordinate with all these professionals to smooth the transition as you separate one household into two. You’ll also have the best chance to create an effective plan for the financial future you want. You can get help putting together a new team of professionals to work with after your divorce if you prefer not to keep the same CPA you used while married, for example.

Create a New Budget

Divorce can leave you feeling understandably confused about your future. What do you do when the plans you made with your spouse are no longer an option?

Aside from the emotional turmoil divorce causes, you might naturally be concerned about your financial future when you lose an income. 

If you’re a secondary income earner or a stay-at-home parent, uncertainty about finances can be stressful, to say the least. Even if you’re the primary breadwinner, it’s hard to give up a portion of your salary to cover the expenses of a second household via spousal and/or child support.

Speaking with a good financial planner is essential when it comes to creating strategies for financial stability following divorce. To create a workable budget, you might have to consider new job opportunities, reduce spending, find ways to balance work with childcare, or downsize your housing.

With the right professional assistance, you can better understand your financial situation, divide assets equitably, effectively coordinate with your divorce team, and create a budget that ensures a sound financial future.

If you’re interested in free public resources and access to professional services to help you through the challenges of divorce, you’ll find it all at DivorcePlus. Contact our professionals today to get started.

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