Managing a Divorce
So many of the key decision points in a financial life are precipitated by crisis or unwanted change. This is all the more true in the case of divorce. No one starts their married life planning on getting divorced and the emotional, relational and financial implications can be substantial.
The main financial issue during a divorce process is what was previously joint is now each respective parties’ responsibility. Joint assets need to be divided up, joint budgets are up to the discretion of one person, and joint decisions now fall to the individual. It is important to know your numbers; income, expenses, credit score, assets/liabilities and net worth. Consulting with a team of professionals before, during and following a divorce will prove invaluable as well. Consult with a divorce attorney, financial planner, CPA and lean on them for support and guidance.
Budgeting can be difficult and time consuming during a divorce. A lot of bills are jointly held and the income is typically still flowing into a joint account. Understanding your personal budget is the first step to making financially independent decisions. Like any budget, begin with listing fixed expenses follow by mapping out discretionary expenses. The goal of creating a budget is to determine how much income you need. A good starting point to developing this budget is to fill out the ‘sworn financial statement’ which is required in every divorce agreement.
The sworn financial statement is also a useful tool to layout assets and liabilities. It is critical to understand what investments, properties and liabilities you own, how they’re titled, and who the beneficiaries are. Being able to accurately and fairly divide these up is the heart of the divorce process. Consider all assets that aren’t just obvious (retirement, investments, house) such as furniture, jewelry, technology equipment, antiques, and the cash value of life insurance. Knowing assets and liabilities allows for a more equitable divorce. Consult with a professional if the statements are difficult to find or understand.
Something that is overlooked during a divorce but is important to make decisions about is jointly held bills and liabilities. Make a list of everything that was once joint; insurance, utilities, cell phone etc. and begin to research transitioning these bills. Likewise, bills don’t stop accumulating during a divorce-especially liabilities. Being too stubborn to pay debts hurts both parties equally.
Once a divorce is finalized, review your new balance sheet and cash flow with your financial professional. This is a great time to re-title accounts and change beneficiaries. Begin to look towards the next chapter as far as your financial goals. What were once joint goals are now your responsibility to develop and grow towards. Where do you want to be in 1 year, 10 years, 20 years? What do you want to save towards? While for many, the process of going through a divorce can be an isolating time, having the support of a trusted Trilogy advisor through the process can help you have a place to discuss, process and strategize your new goals and responsibilities.
Advisory services provided by TrilogyCapital, Inc,. a Registered Investment Adviser. Separate advisory and securities services may be provided by National Planning Corporation (NPC), a SEC Registered Investment Adviser and broker-dealer. Member FINRA and SIPC. Certain registered representative with NPC are doing business under the name of Trilogy Financial. TrilogyCapital, Inc. and Trilogy Financial are affiliated by common ownership and are separate and unrelated to NPC. Please consult with your representative to confirm, on which company’s behalf services are being provided.