Financial Awareness Is A Must When Preparing For Divorce


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Aviva Pinto is a CDFA, CDS and Managing Director and Wealth Manager at Wealthspire Advisors.

According to the U.S. National Center for Health Statistics, in 2021 there were over 680,000 divorces in 45 of the 50 U.S. states plus D.C. (not included were Indiana, California, Hawaii, New Mexico and Minnesota). Including those five would have added to the staggering number. As there are two parties involved in a divorce, that would mean 1.36 million people a year.

Many of my clients come to me when they are considering divorce or are in the midst of a divorce. They all have something in common. Most of the time, they were not the ones that were handling the finances for their families.

Many who come to me when they are contemplating divorce generally do not know what their spouse earns, the specifics of their spouse’s business, business partnerships, where the streams of income come from, whether there are cash assets or what debts are involved personally or professionally. They don’t know if there are crypto accounts.

Some do not know if they have a mortgage on the house, whether there is additional debt in the form of a line of credit or if a second mortgage was taken out. Some do not know what credit card debt the family owes. It is not unusual for one partner to be completely in the dark. Some are quite ashamed of their lack of financial knowledge. I tell them that there is no shame in not knowing about their finances and not having paid more attention to them during their marriage. It is never too late to learn or get assistance from someone who can help.

However, it is important to get this information as quickly as possible because judges are much less sympathetic to spouses telling them that they just don’t know. It has never been easier to gain financial knowledge. It is your responsibility to learn and be armed with your financial information.

Where do you start? A crucial step of the divorce process is gathering important documents. Both you and your soon-to-be ex will have to complete a sworn statement of income, expenses, assets and liabilities. If this seems daunting, talk to a wealth manager and preferably a Certified Divorce Financial Analyst (CDFA). They’ll be able to help identify what you own, what you need to continue living at your desired quality of life and help you plan for your financial future.

There are a number of reasons why you would want to consider assistance from a CDFA such as:

• If you are not financially literate.

• You do not want to deal with the financial details.

• You have complex assets such as multiple homes, business holdings, expensive artwork, jewelry or collectibles.

• One or both of you are business owners/self-employed.

• There is disagreement about what assets are marital assets.

• You need assistance dividing the marital assets.

• You need help determining the financial and tax implications of the asset division.

What should you pull together beforehand? You should be ready to present all of your financial info. This includes investment accounts, credit statements, tax returns, and partnership agreements for businesses. Any estate planning documents, such as wills, powers of attorney, trusts and pre-nuptial agreements should also be included. All income information along with deeds or titles for vehicles and real estate should also be included.

For those who are not familiar with these documents or not sure how to manage their own finances, these tasks can be overwhelming. A CDFA can work with you to help find and categorize the documents.

Divorce often means that the income that used to pay for one household will now have to support two in the future. And that is why it is important to have a sound financial plan to help keep you organized during the divorce process and help you plan for your financial future after the divorce.

A CDFA can help you create a financial plan. They’ll also be able to tell you whether or not you’ll need a change in income to maintain your lifestyle. They can teach you how to be financially knowledgeable and steer you in the right direction financially during and after the divorce proceedings.

You can find a CDFA by looking at the CDFA directory on the Institute for Divorce Financial Analysts website or at the National Association of Divorce Professionals website. Look for one that is knowledgeable in the divorce laws of your specific state. Find one that will work closely with your matrimonial attorney and be part of your “team.”

Find out how experienced they are, how many clients they have helped with their divorces and how they are paid. Will they be able to work with you during and after your divorce to help you with post-divorce budgeting, financial planning and wealth management? Importantly, choose one that suits your temperament and understands what you need.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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Nicole Lambert
Nicole Lambert
Nicole Lamber is a news writer for LinkDaddy News. She writes about arts, entertainment, lifestyle, and home news. Nicole has been a journalist for years and loves to write about what's going on in the world.

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