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Wealth & Well-Being

When To Hire A Divorce Financial Advisor

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Going through a divorce is tough, and it can mess with your emotions and plans for the future. Many people quickly turn to a lawyer for help, but what they might not realize is that a financial advisor is just as important. It doesn't matter if you think you have a lot of money or not; divorce can seriously mess with your finances. Lawyers are great for legal stuff, but when it comes to your money's future, you also need a money expert, a financial advisor. Financial advisors are not just for big money situations; they help make sure the divorce process doesn't ruin your finances. So, when should you bring in a financial advisor? This blog will break it down, explaining why they are so important in keeping your money safe during such a tough time. Knowing what a financial advisor can do will help you decide if getting one is the right move for you.

When Do You Need A Financial Advisor?

Deciding whether to bring in a financial advisor is an important decision, especially when dealing with financial issues. Here, we look at several situations as well as important signs that indicate the potential need for a divorce financial advisor, providing complete insight into the circumstances in which their expertise can prove invaluable:

1. Lots of Valuable Assets: If you and your soon-to-be ex have built up a significant number of valuable assets, such as homes, investments, or even a jointly owned business, a divorce financial advisor can assist in ensuring that these assets are divided fairly and equally.

2. Inherited Wealth: If you or your spouse received wealth from a relative during your marriage, a divorce financial advisor can give you the necessary expertise to make sure that the financial implications are well-managed, which leads to equitable and reasonable results.

3. Complex Investments: Dealing with a wide range of investments or owning several real estate properties might be challenging. A financial advisor can help you negotiate these complexities and figure out how to distribute your assets wisely.

4. Retirement Money Division: Understanding how to divide retirement savings fairly can be hard. A financial advisor who specializes in divorce can guide you throughout the process, ensuring that the distribution is not only fair but also considers long-term financial implications.

5. Considering Alimony or Child Support: When discussing financial support such as alimony or child support, they can provide valuable insights, assisting you in understanding the financial implications and ensuring that these agreements are consistent with your overall financial well-being.

6. Less Financial Understanding: If the complexities of financial matters are difficult for you to understand, a financial advisor can simplify and explain things clearly, allowing you to make informed decisions about your financial future.

7. Making Sure Everything's Fair: The possibility that your ex may have hidden money can be a serious concern. A financial adviser can help in tracking down any hidden assets and may offer the services of a forensic accountant in order to ensure complete transparency and fairness in financial transactions.

8. Financial Planning After the Divorce: Post-divorce, they can guide you in managing your finances independently, especially if your ex was previously responsible for handling financial matters. They can offer valuable advice on savings and planning for your future financial stability.

However, there are times when you might not need a financial advisor:

  • Agreeing on Everything: If you and your ex have a clear understanding of your financial situation and agree on how to split things up without any disputes, the dedicated services of a divorce financial advisor may not be deemed necessary.
  • Not Much Money Involved: In situations where there are not many valuable assets at stake and neither of the parties is looking for additional financial support such as alimony or child support, the services of a financial advisor might not be considered necessary.

Understanding the specifics of your financial situation is key when deciding whether the expertise of a financial advisor is necessary. Seeking professional guidance ensures a thorough and well-protected approach to your financial well-being during and after the divorce process. Every case is unique, and having a financial advisor by your side can assist you in making the best choices for your financial future.

Financial Planning Tips For Divorce

1. Separate Joint Accounts: Separating joint accounts is a must-do when planning for divorce. If you still have joint accounts with your ex, it's important to close them as soon as possible. Leaving them open could cause problems later on, such as unexpected bills or overdraft fees. Make sure to close these accounts right away. If there is money owed on the account (like a credit card balance), ask to freeze it to prevent any more charges. Double-check to ensure the account can't be reopened without your permission. This way, you can protect yourself from any financial headaches in the future.

2. Update Beneficiaries: After a divorce, it's necessary to update the beneficiaries on your accounts. If you forget this step, your ex could inherit your IRA (Individual Retirement Account) and other assets after your passing. Thankfully, changing beneficiaries is usually simple – you just need to fill out a form. This form lets you choose who should get your stuff if something happens to you. If you have made a new living trust, ask your lawyer who should be listed as the main and backup beneficiaries on your accounts. This way, you can make sure your belongings go where you want them to, and you can avoid any surprises later on.

3. Open New Accounts Post-Divorce: It's a good idea to open new accounts in your name after your divorce. This gives you control over your money and lets you start fresh with your own banking. Opening new accounts helps you manage your finances on your own and choose the best options for your needs. You can set up accounts for saving, checking, and any other financial goals you have. Prepare a list of the accounts you had during your marriage and try to replace them with new ones as soon as possible.

4. Review And Update Personal Insurance Policies: When you are getting divorced, don't forget to review and update your insurance policies. Contact your insurance agent to make changes to your car, home, and umbrella coverage. Check your homeowner's policy to see if you have listed any belongings that now belong to your ex. You don't want to keep paying for things you no longer own. And don't forget to get an umbrella policy to protect yourself—it's important and not too expensive.

5. Build An Emergency Fund After A Divorce: After your divorce, it's a good idea to start saving for emergencies. This fund acts as a safety net, giving you financial peace of mind if unexpected things happen. Try to set aside enough money to meet your living needs for at least 3 to 6 months. Having this fund can reduce stress and help you focus on moving forward after your divorce. Start by setting small savings goals and add more money over time. Having an emergency fund means you are ready for any money surprises that might come your way.

6. Transfer Assets Into Your Sole Ownership: After getting divorced, it's important to transfer all your assets into your sole ownership. This means making sure things like property and investments are in your name only. Doing this gives you more control over your money and helps you feel more independent. It also makes managing your finances easier and avoids any confusion later on. Taking care of this step early on helps you feel more secure and in charge of your financial future after your divorce.

7. Analyze Your Investments: When going through a divorce, take a good look at your investments, especially if your spouse has managed them before. You might have things you are not familiar with or that don't suit you anymore. Check each investment carefully to make sure it fits your goals and how much risk you are comfortable with. Consider getting help from a financial advisor to create a new plan that's right for you. They can also help you understand any taxes you might have to pay and find new investments if you need them. This way, your investments match your new financial situation after the separation.

8. Create A Fresh Financial Strategy After Divorce: It's important to create a new financial strategy that fits your new life after divorce. Get help from a financial advisor to figure out things like how much you should save for retirement and what your budget should be. They will help you make smart money decisions and adjust to your changed situation. Getting expert advice can set you up for financial success as you move forward after your divorce.

9. Invest In A Secure Home Safe: When planning your finances after divorce, think about buying a secure home safe. It's a smart move to protect your valuables, especially if you didn't get one during the asset split. A home safe keeps your important documents, jewelry, and other precious items secure, giving you peace of mind. Investing in a safe is a simple way to safeguard your belongings and stay in control of your assets after divorce.

10. Secure Personal Data On Electronic Devices: As you handle your finances during divorce, make sure to keep your personal information safe on electronic devices. Protect sensitive stuff such as bank records and passwords stored on phones, computers, or tablets. Use strong passwords and other security measures to keep your data safe from anyone who should not have it. And don't forget to log out of accounts and remove any access your ex might have had to your devices. Keeping your electronic information secure is important for your privacy and financial safety after the divorce.

How To Hire A Divorce Financial Advisor 

Dealing with divorce can be complicated, particularly when handling financial matters. During this difficult period, seeking assistance from a financial advisor can be incredibly beneficial. To ensure you select the most suitable advisor for your needs, follow these steps:

  • Identify Your Requirements: Before you begin your search, consider the specific financial aspects of your divorce that you require assistance with, such as asset distribution, tax implications, or long-term financial planning.
  • Look For Specialized Expertise: Look for financial advisors who specialize in divorce or have years of experience in this field. Look for the qualification of Certified Financial Planner (CFP) as an indicator of expertise.
  • Seek Recommendations: Ask for recommendations from trustworthy sources such as friends, family, or legal experts who may have already worked with divorce financial advisors before.
  • Verify Qualifications: Verify potential advisors' credentials and qualifications to confirm they are officially licensed and have the necessary expertise in divorce financial planning. To determine their level of expertise, review their testimonials and case studies.
  • Consultations: Schedule meetings or consultations with several advisors to discuss your circumstances and figure out compatibility. Prepare questions about their approach to financial planning, cost structure, and service offerings.
  • Understand The Fee Structure: Learn about how the advisor charges for the services they provide, such as hourly rates, retainer fees, or flat fees. Ensure there are no hidden costs associated with their services.
  • Check References: Ask for references from previous clients or professional colleagues to confirm the advisor's reputation and success. Hearing about other people's experiences can provide important insights regarding their expertise and talents.
  • Trust Your Instincts: Finally, when it comes to making a decision, trust your intuition. Choose a divorce financial advisor who builds confidence, demonstrates honesty, and has an honest interest in helping you overcome the financial challenges of divorce.

By taking these steps and completing thorough research, you can find a trustworthy and skilled financial advisor who can provide essential support throughout the divorce process, guaranteeing your financial stability and peace of mind as you begin a new chapter in your life.

Conclusion

Handling the complexities of divorce and financial planning requires expertise and careful consideration of legal and financial matters. A financial advisor can offer invaluable support in making well-informed decisions that protect your financial well-being. In today's world, where divorce proceedings can be challenging, seeking guidance from a specialist in financial planning is a smart move. By working with a professional who understands the intricacies of divorce-related finances, you can achieve greater stability and peace of mind for the future. Their assistance goes beyond just managing money; it's about securing a brighter financial future for you and your family as you start a new chapter in life.

If you are facing divorce and need assistance with financial matters, consider hiring an expert from Northstar Financial Planning. We work closely with you and the other professionals on your divorce team to ensure that you reach a fair and acceptable settlement. Our goal is to provide personalized guidance and support to help you navigate this challenging time with confidence and clarity.


Written by Alexa Darbe in collaboration with Lexicon Advisor Marketing

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