Through the development of trusting relationships with small business owners in our area, Peck Legal Group is able to provide our clients with potential resources, where guidance is important for navigating other areas of life, not focused on legal services. This week, Jennifer B. Harper, CFP of Bridge Financial Planning, has written a valuable article, including helpful information to keep in mind during and after divorce, regarding future financial goals.
Divorce is hard. And emotional. It has a ripple effect on nearly every aspect of life.
The process to negotiate an equitable settlement can be difficult. But as an advisor that has seen the long-term impact of poor negotiations, I would advise everyone involved to please be patient and take the time and effort to do it well. The cost of doing it poorly is just too high.
The best place to start is with a simple realization that there are (at least) two distinct processes happening at the same time. One is emotional and one is financial. In a perfect world, it would be good advice to avoid big financial decisions during a time of high stress. Divorce can make that nearly impossible!
If we know that up front, we can work through the process with an organized plan. In this process, knowledge is power. Knowing what’s on the table for discussion will give you confidence and allow you to focus on actionable items. While it’s tempting to go into ‘fight mode’, it’s usually best to take the high road. Focusing on the next step forward can help.
Include everything. Your attorney and advisor can help you determine the appropriate list in each case, but it’s common to overlook key information in the first round or two of data gathering. You may know about an account, but do you know the cost basis of the assets (how much you originally paid for the assets in the account)? Beneficiaries of insurance policies and IRA’s? What will happen to each person’s health insurance? Are there deferred compensation plans or other assets that are easy to overlook? Do you know how each credit card, auto loan, or mortgage is titled? How Social Security income may be affected? When is the right time to update estate planning documents? And not just the will! Do you still want to name your soon-to-be ex as your health and financial power of attorney?
Create a new Spending Plan.
Run a credit report for yourself. Open a new account in your name. Track expenses and develop a new budget. When you build that budget, don’t think about just the normal day-to-day expenses. Think about things like annual insurance premiums, summer camps for the kids, how much has been going into savings/retirement, maintenance & upkeep, holidays & vacations. What may need to be cut back? Really think through what it will take to keep it all moving.
These are all topics that most people don’t spend a lot of time thinking about, but can have a significant impact on decisions being made during life transitions, including death, disability, and divorce.
Take Care of You.
Something else that will be key is to take care of yourself! Take time to reflect on what you need going forward. When the process gets overwhelming, take a step back for a day or two and come back to it with renewed purpose. You will get through it in time.
There are a lot of resources available to help with the process. Don’t hesitate to work with a counselor, talk with your pastor, and rely on friends to get you through. Read books, go for a walk, do what you need to do to get to the next step.
To learn more about ways Bridge Financial Planning, LLC can provide you direction to help achieve future financial peace, click here, or learn more about Jennifer Harper, CFP on our website by clicking here.