Divorce is a difficult and emotional process that affects many people. As a financial planner, I highly recommend seeking the help of multiple professionals, including attorneys and accountants, in order to make informed decisions and achieve the best outcome.
The first step in preparing for divorce is to get your finances organized. Gather all your assets and make copies of important financial documents, such as deeds, tax returns, bank statements, and investment records. When you divide your assets, mediation can be a cost-effective alternative to litigation when dividing assets. If it becomes contentious attorney's fees can become costly, decreasing the pool of marital assets you have to divide...
It is important to understand that divorce often requires stretching the same amount of income over two households and incurring additional expenses. Some of these expenses could be on-going such as counseling or increased child care costs while others could be larger one-time fees like security deposits on a new rental and moving costs.
Dividing assets can also be complex, as the forced sale of a home or portfolio may have tax consequences and different assets may have varying net values after considering the these taxes. To avoid making costly financial mistakes during a divorce, it is important to consider these tax implications and also how each asset will suit the recipient in terms of risk tolerance and liquidity.
By having a team of professionals working together, you can ensure that all aspects of your financial situation are taken into account and make informed decisions for your future.
We recently had a webinar featuring a family law attorney and a forensic accountant to discuss this topic more in depth.