You’re contemplating one of the biggest decisions of your life. It will affect where you live, your lifestyle, your relationships, and the very quality of your life. Ironically, it’s the bookend to the decision that preceded it some time ago … the decision to get married. You’re thinking about divorcing your spouse.
You probably didn’t get financial advice when you decided to get married. But now the stakes are different. You and your spouse own things together. You may have children together. Perhaps you’ve been out of the workforce, and you’re uncertain about how you’ll support yourself after a divorce.
You really need financial advice, and the best time to get it is before you make the move to divorce. There are financial advisors who specialize in helping people like you. They carry the Certified Divorce Financial Analyst® credential. What can a CDFA® do for you?
Where Will I Live?
When you think about parting ways with your partner, one of the first things you probably think about is where you’ll live. Shelter is a basic human need and, along with food and clothing, we’re wired to make sure we have it.
You may be inclined to stay in your current home. That’s a natural desire. But is it the right decision? Can you afford to stay in that house? Would it be better to buy a smaller house? Would it be better to rent for a while?
A CDFA® can help you think about your housing options and make the decision that’s best for you.
How Much Can I Spend?
Many people find the process of developing a spending plan based on income and expenses unappealing. But it can be liberating. It may be the first time you‘ve really taken control of your income and spending.
A CDFA® can help you identify your sources of income, and your expenses, and manage them in a way that allows you to live a comfortable lifestyle today and ensures your long-term financial security.
Do I Have the Right Insurance?
There are many risks in life. When you buy insurance you transfer some or all of a risk to a company.
What will you do for health insurance after your divorce? If you work after the divorce, will you need disability insurance? If your ex-spouse will provide most of your household’s income, like through spousal support, will you need to have life insurance on him (or her) to protect that income?
What about insurance on your property, like your home, auto, and other valuables?
A CDFA® can help you evaluate your need for various kinds of insurance, and work with your insurance agents (or refer you to them) to help you manage your risks.
How Will My Taxes Change?
Divorce has many tax consequences. If you receive support/alimony after your divorce, it won’t be taxable income for you. If you have children and receive child support, it also won’t be taxed.
Did you know that an IRA, a Roth IRA and an HSA all have very different tax profiles?
It’s generally not possible to take distributions from retirement accounts before age 59 ½ without paying both income tax and an early withdrawal penalty. However, under the tax code, there is a way to avoid the penalty on certain withdrawals.
A CDFA® can help you understand the tax characteristics of the things that you and your spouse own, and show how taxes affect their value.
What Assets Will I Have?
When you divorce, you and your spouse will divide your assets (and liabilities). Can you identify all your assets? Do you know how your assets are titled? Do you know what they’re worth?
A CDFA® can help you develop an inventory of assets and help you think about how to divide the assets you and your spouse own together (and separately).
Peace of Mind
Divorce can be stressful. Sadly, it usually is.
A CDFA® can guide you through the financial aspects of your divorce. You’ll have a financial expert on your side who will be looking out for your best interests.
A CDFA® can bring you peace of mind.
Getting Help From an Advisor
If you’re unsure about the financial aspects of divorce, consider working with a Certified Divorce Financial Analyst (CDFA®), Certified Financial Planner™ (CFP®), or Certified Public Accountant (CPA) with the Personal Financial Specialist (PFS™) credential. Advisors who hold these designations had to meet rigorous educational, experience and ethics requirements.