Most people would agree that getting a divorce may cause uncertainty and pain. But couples who separate the emotional from the business aspects of divorce will have financial security and far less anxiety. Since you are searching for help, you have already taken an important big step toward achieving that goal.
Developing the ability to review assets analytically remains key to your successful divorce planning strategy as you refuse to allow emotions to take over. You succeed by separating any emotional upheaval from the business aspect, making it easier to make clear-headed decisions and work through negotiations. If emotions begin to creep in and overwhelm you, call a friend or visit a counselor. A counselor can make the whole process much easier, assisting you as you sort through the emotions. Do not try to make important financial decisions when you are overcome with emotion.
As you concentrate on keeping the process analytical, follow these helpful guidelines
- Do determine the most important items in your financial settlement, establishing others that can be conceded. The most important financial assets include cash, brokerage accounts, IRAs, 401ks and the home.
- Do not allow attorneys to take over control of your divorce, since decisions made now will affect your life for many years. Stay involved and informed in the process details.
The home
The home may be sold and the proceeds divided; however, frequently one spouse prefers to maintain the home. In this case, assets are awarded to the other spouse to offset the equity in the home. However, be forewarned that this can impoverish the spouse who maintains the home, especially if income-producing assets were largely left in the hands of the other spouse. The financial planner should estimate future effects of any division of assets.
If there are minor children involved, normally the custodial parent wishes to maintain the home for the benefit of the children and their continued stability.
It is not necessary to refinance the house, since a legal document signed by the spouse keeping the property will protect the other spouse. This is called a Deed of Trust to Secure Assumption.
Renting or Buying
If you are moving due to the separation or divorce, consider renting for a year or so until any emotional and financial turmoil have subsided. Major changes can often require moving again. And typically, if you purchase a home and sell within two years, this produces a net loss on the transaction due to real estate commissions, closing expenses, moving costs, etc.
What do I do about our joint checking account during the divorce?
Since either spouse can withdraw funds from this account, it would be wise to withdraw the amount you wish to protect and place it in an account under your name only. If only one spouse has earnings from employment, special arrangements should be made for temporary support. This can be by agreement or “temporary orders” prepared by an attorney.
Why employ the services of a Certified Divorce Financial Analyst?
A Certified Divorce Financial Analyst provides invaluable help in understanding the tax and financial intricacies involved in divorce. In addition to the training and experience of a Certified Financial Planner, a Divorce Financial Analyst has received extensive training in managing a divorce at the Institute of Divorce Financial Analysts as well as numerous family law seminars. This professional will be able to sort out for you the financial matters involved in a settlement by analyzing the long-term financial impact, comparing possible manners of division, and illustrating them in easy-to-understand graphs.
Patricia Barrett CFP CDFA