Financial Planning and Divorce—A House Divided?

Divorce ranks as one of the most stressful of life’s events, affecting not only the emotions, but also the wallets, of those involved. Because it may involve change at almost every level of life (e.g., social relationships, family, and work), it usually requires a fundamental reexamination of life goals and expectations.

Once divorce has moved from a “possibility” to a “reality,” it is essential that you learn how to protect your legal rights. From a financial perspective, divorce involves three things: division of marital property, child support, and alimony. Understanding the divorce process will help position you to have the law work to your advantage on all three fronts.

While by no means a complete list, the following steps should help you anticipate what might lie ahead, instead of merely reacting to events as they occur:

  • Consult an Attorney. As soon as divorce has become a possibility, learn your legal rights. An initial consultation does not obligate you to file for divorce; it lets you preview the proceedings and can help reaffirm your personal sense of control. You may want to explore the pros and cons of both litigation and mediation.
  • Draft a Chronology. Start detailing the “when, where, and what” of your marriage. Dates are important, including the date of your marriage and date of separation, as well as the birth dates of your children.
  • Inventory Everything. Compile a complete list of what you own and what you owe. Gathering recent tax returns, insurance policies, retirement plan documents, and financial statements should help you organize a comprehensive financial picture. Begin thinking about which possessions you would like to keep and which you wouldn’t mind relinquishing.
  • Determine Your Cash Flow Needs. Working from a checkbook ledger and monthly credit card statements, break down all of your expenses while married and try to estimate their cost once you are on your own. This information will help you prepare a cash flow statement that will become the basis for negotiating your financial support needs. Remember to consider potential new expenses, such as counseling or childcare. Also evaluate your future insurance needs.
  • Explore Your Career Options. Whether you have been working full-time, part-time, or not at all, now may be a good time to assess your career options. If you have put your own career on hold for the sake of your spouse’s career or your family, you might want to think in terms of additional support for any training you will need to get back on a career path. Clearly, your financial situation will play a large role in determining if you are going to further your education, or possibly work a second job. Keep in mind that a crisis can be a great motivator toward planning a more satisfying future.

The emotional shock of divorce may tempt you to place all of the responsibility for the details on your attorney. However, you should keep in mind that once the divorce is final, you, not your attorney, will have to live with the consequences. Staying in control of your divorce through active participation may be the best way to help achieve an outcome that protects your interests and meets your needs.

Copyright © 2004 Liberty Publishing, Inc. All Rights Reserved.

58860

Registered Representatives and Financial Advisors of Park Avenue Securities LLC (PAS), 5040 Roswell Road, Atlanta, GA 30342, 1-800-366-0839. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor. Financial Representatives, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Southeastern Financial Group, LLC are not affiliates or subsidiaries of PAS or Guardian.

PAS is a member of FINRA, SIPC. The Financial Representatives of Southeastern Financial Group, LLC are not licensed to sell insurance in all 50 states. To find out if an agent is licensed in your state, please contact Debe Draudt at 205-313-6724. Neither Park Avenue Securities, Guardian, nor their representatives render legal or tax advice. Please consult with your attorney, accountant, and / or tax advisor for advice concerning your particular circumstances. Disability Income and Long Term Care products underwritten and issued by Berkshire Life Insurance Company of America, Pittsburgh, MA, a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY. Products not available in all states. Product provisions and features may vary from state to state.

THE LIVING BALANCE SHEET® and logo are registered trademarks of The Guardian Life Insurance Company of America, New York, NY. Patent is pending. The trademark The Living Balance Sheet and the content and graphics on this website which relate or refer to The Living Balance Sheet system are used under license from Guardian.

The information or opinions contained in this Internet site should not be construed by any consumer and/or prospective client as an offer to sell or the solicitation of an offer to buy any particular investment product. The information contained herein is directed solely to those individuals who reside in jurisdictions in which the representative is registered in the state where the consumer and/or prospective client reside. Any subsequent direct communication with a consumer and/or prospective client shall only be conducted by a representative that is registered in the state where the consumer and/or prospective client reside.