Divorce not only has a traumatic emotional impact but a financial impact as well especially for women.
Unfortunately, divorce is one of life’s unpredictable events that occur in approximately 50% of marriages. Divorce not only affects the individuals involved, but it also affects the children, family, friends and employers of the divorcing couple. Divorce not only has a traumatic emotional impact but a financial impact as well especially for women. According to WIFE.org, studies show that in the first year after divorce, the wife’s standard of living may drop almost 27 percent while the husband’s may increase by as much as 10 percent.
Once you have made the decision to divorce, it is critical to have a divorce planning team. Your divorce planning team should consist of key professionals. At a minimum, your team should include a family law attorney and a divorce financial planner. The financial planner should hold the specialized designation of Certified Divorce Financial Analyst™ (CDFA™). A Certified Divorce Financial Analyst™ (CDFA™) is someone who comes from a financial planning, accounting or legal background and goes through an intensive training program to become skilled at analyzing and providing expertise on the financial issues of divorce.
Unfortunately, financial planners are all too often brought in only after the fact, even though they can provide valuable support to you and your family law attorney by helping you avoid making some of the following common financial mistakes:
- Negotiating to keep the home when you can’t afford it
- Not understanding the capital gain taxes upon the sale of the marital home, or how the sale can impact each of you
- Not looking at the long-term impact of a settlement
- Thinking that retirement assets have the same value as an equal dollar amount of non-retirement assets
- Failing to understand the tax implications of spousal versus child support
- Not understanding how to divide debt
The key is to educate and empower yourself….
If you are currently planning or in the process of a divorce, it is important that you have a competent divorce planning team, make good financial decisions and gain the understanding of the resources, information and expertise available.
Fully understanding how the financial decisions you make today will impact your financial future will help you avoid signing a divorce agreement that you may later regret.