A divorce does not merely separate two lives; it divides two people’s finances. People go into a marriage with their own money, investments, and debt. Over time the two people combine their families, friends, homes and finances. When the marriage ends, so does this monetary connection.
Separating your finances from another persons can be incredibly tricky. For high net worth marriages, there are significant tax ramifications that need to be considered. Stocks, bonds, art, real estate, 401(k)s, and other investments and assets all need to be considered.
Due to the complications that can arise when dividing finances, it is therefore important to work with a financial advisor in addition to your divorce attorney. A financial professional will help you do the following.
Negotiate a Fair Settlement
Your divorce attorney will guide you through the court process of determining what are marital assets and what needs to be divided. However, you attorney is not a financial professional. He or she will not know all of the tax or other financial ramifications of your decisions.
If you and your spouse are trying to work out a divorce settlement together, you need to have both an attorney and a financial planner who have only your interests in mind. If you had an accountant or a financial planner with your spouse, you should hire a new one just for you.
Together your attorney and planner can help you determine how to protect your assets while planning a fair settlement. He or she will also give you the knowledge you need to negotiate with your spouse, who may try and get the upper hand in some way.
Avoid Emotional Mistakes
Divorce is an emotional experience —there is no way around it. However, just because you are experiencing a myriad of emotions, this does not mean you have to let these feelings lead to mistakes.
Many men and women make financial decisions based on feelings; this can put them in a dangerous financial position in the future. For example, a spouse may feel guilty for an affair and want to leave everything to the other party. However, that choice could mean giving up important investments and retirement income. Or, a spouse may want to stay in the family home even though he or she really cannot afford to maintain it on his or her own.
A financial planner cannot tell you want to do during your divorce, but he or she can help you see the financial reality of the situation and help you avoid costly mistakes.
Prepare for the Future
Many partners do not share the financial responsibilities in the marriage evenly. Often, one person makes the budgets and pays the bills. In a divorce, the individual who mostly stayed out of the finances might not be sure of what money and investments are there or how to financially take care of themselves in the future.
A financial advisor, along with the divorce attorney, can help someone understand the finances of his or her marriage, including the assets he or she is entitled to and the debts he or she may have to pay. The planner can also help the individual understand their finances on their own, including how to budget, develop a short-term savings, and plan for retirement.
For more information on the financial aspects of divorce, contact our skilled DuPage County family law attorneys today. We are eager to assist you with your case.