Helping divorcees adapt to a major transition in life
We all know the devastating effects divorce can have on the finances of women. It’s why we are proponents of cooperative and collaborative divorce, where couples seek to arrive at a mutually agreed-upon settlement through negotiation. An alternative to the traditional court-based divorce, it can save time, money and the destruction of litigation.
Kennie Taylor watched his younger sister go through a difficult, traditionally litigated divorce and felt the emotional toll it took on her – and all of his family. He vowed, after watching his sister’s experience, to apply his expertise as a financial advisor to help women facing divorce find their way to a better outcome.
The highly emotional courtroom environment is not the place to determine how marriages should be dissolved, and that’s especially true when children are involved. A cooperative and collaborative process can remove the courtroom entirely, while maintaining maximum privacy for you and your family. Together with you, we work with your legal and accounting professionals to help you manage the many details of divorce and your future financial picture.
Whether you are presently going through a divorce or newly divorced, we can guide you through the many financial details, from dividing assets to mitigating taxes – giving you an opportunity to move forward with your life.
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If you are going through a divorce, you are undoubtedly dealing with many challenges and have many questions. Being prepared can help things go more smoothly, reduce your stress and preserve your financial interests.
Before entering into any divorce negotiations, we can assist you in having a thorough understanding of your financial situation and helping to ensure that your interests are being considered. Working together with you, your accountant and your attorney, we can help compile the necessary financial documents, analyze the data and present an objective picture of your current and future financial status.
There are many specific issues to consider. Do you or your spouse own a business? If so, it could be your most valuable marital asset, but if it is a primary source of income, it may not make financial sense to sell or liquidate it. We can help you determine the most appropriate course of action.
What about the house? Deciding whether to keep or sell the house you’ve lived in together can be one of the most complicated decisions you face, as it presents both emotional and financial issues. We can help you determine what will be best for you from a financial standpoint.
Who gets what? In an uncontested or kitchen-table divorce, the two of you may be able to divide your assets on your own, and then have that agreement finalized by your attorneys.
While the specifics vary by state, your attorney can advise you on important matters such as marital versus non-marital property, and equitable distribution. Marital property includes virtually all property that you and your spouse acquired during the marriage. It can include real estate, investments, bank accounts, art collections, cars, boats and so on. You should discuss the issue of marital property with your attorney, because it can become complex.
Most states will rely on the concept of equitable distribution – to achieve a division that is fair based on a range of considerations. In a few states, the community property approach is used, where property is divided evenly between spouses.
You should consider building a team that includes your own attorney, accountant, financial advisor and possibly a divorce coach. An experienced team can provide you with the guidance and support you need to make informed decisions and approach the future with greater confidence.
It is possible to get through a divorce without a lawyer, but usually it’s not wise. Your attorney takes on the responsibility of safeguarding your legal interests, deals objectively with the issues that arise, and can help you establish an estate plan so you can build your own legacy.
Your tax status changes significantly as the result of a divorce. An accountant can advise you on matters such as income taxes and capital gains. This may help to mitigate complex tax ramifications stemming from your marriage.
A financial advisor can help you understand the assets you own, your liquidity and cash flow needs, as well as strategies for pursuing short-term and long-term goals such as paying for college, planning for retirement and building a legacy.
Divorce can also be a highly emotional process, as well as a legal and financial one. A therapist, clergyperson or other personal coach can be invaluable, helping you deal with the stressful aspects of divorce.
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Now that you’re in charge of your life, it’s time to take significant steps toward building your financial independence. One of the most important tasks is to establish your own financial identity. Start by building and managing your credit, as it can help you accomplish many goals.
Using credit wisely and building your good credit score are important concerns at any time, but especially after your divorce. Credit scores are used by many organizations for more than extending credit. For example, insurance companies and prospective employers may request authorization to review your credit reports as a qualifier for coverage or employment.
Liquidity – easily accessible money – is another important matter. It’s not advisable to tap into your 401(k) account or sell investments at an inopportune time, as it can result in serious tax consequences, other penalties and loss of potential investment growth. We can offer thoughtfully considered liquidity strategies to help meet your needs.
What’s more, there are other aspects of your personal financial life that deserve attention, such as outdated beneficiary designations on your insurance policies and investment accounts, your medical directive and power of attorney. It is important that you consult your attorney regarding the legal ramifications of changing beneficiaries.
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Now is the time to reassess the goals and priorities in your life – you deserve a dedicated financial team that will look out for your best interest and devote an extraordinary degree of industry knowledge and expertise to establishing your financial independence.
We are committed to personally helping you, making sure you have a sound strategy in place that covers every aspect of your financial life – a truly comprehensive plan that goes beyond just managing your investments.
At Tailored Financial Strategies, we acknowledge that losing a spouse for any reason can be very overwhelming and stressful. We are here to talk it out and will carefully address each detail – so you are free to focus on what matters most to you and your family. Let’s have a meaningful conversation about how we can make a difference in your life.
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While we serve women all over the country, for those in the Tampa Bay area, we host the Women Decision Makers’ Group, a quarterly event in St. Petersburg and South Tampa. These small-group events are exclusively for women and feature ever-changing formats ranging from a discussion of catalysts for recent market action, to holding a fireside chat-type of meeting with an open Q&A, or even having experts come in to host workshops on how to better utilize the functionality of your iPad. You are always invited to attend. Please contact Beth DeMarco for information regarding our upcoming events: 844.808.7924 or beth.demarco@raymondjames.com.
A woman encountering the prospect of divorce
Case Study
Janet has been married for nearly 20 years and has two children, but the rocky relationship has reached a point where divorce is looming. Due to the many financial and emotional factors at hand, she is understandably under a lot of stress. She seeks the help of caring and experienced divorce planners to help her through this complex and challenging time.
What we would do
The first step would be to convey to Janet the benefits of a cooperative and collaborative divorce, where the wife and husband seek to arrive at a mutually agreed-upon settlement through negotiation. We would explain to her that it is an alternative to the traditional court-based divorce that can save time, money and the destruction of litigation. Our next step would be to help compile and analyze her financial information to get a clear picture of her current financial situation and future needs, then work with her other professionals to arrive at a fair and reasonable settlement. We would also keep in contact with her accountant and attorney to help ensure that all the beneficiaries listed on her documents were up to date and in accordance with her wishes. In addition, we would address cash flow and credit concerns to help her have the money she needs to maintain her lifestyle.
This case study is for illustrative purposes only. Individual cases will vary. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making any investment decision, you should consult with your financial advisor about your individual situation.
