Research shows that getting divorced is one of the most stressful events in life – and a frequent victim of that stress is effective financial planning for divorce. An experienced wealth manager can be invaluable in this situation, providing the clear head, careful consideration and financial expertise required.

THOR Investment has helped many clients through divorce, and we believe there are three critical areas of consideration when anticipating or working through the breakup of a marriage.

Financial Planning for Divorce, Key #1:  Know What You Have

The first order of business is to take an accurate inventory of all assets.  Unfortunately, in most cases only one spouse handles the family finances and investments – and statistically speaking, it is still most often the husband.  That puts the wife at a severe disadvantage, unless she has someone to help her know where to look.

So, the first step is all about discovery.  A lot of times one spouse doesn’t even know what assets are there.  Are there real estate holdings, stocks, bonds, insurance policies, or perhaps stock options and other forms of future compensation that only one spouse may know about?  And is the family wealth tied to a small business, which requires its own special knowledge to financially unwind?

Financial Planning for Divorce, Key #2:  Rely on Separate Financial Planners

Of course, during a marriage, spouses likely share the financial professional who will now be called upon to help determine and divide assets.  However, it is highly recommended that, during  financial planning for a divorce, each spouse have his or her own financial advisor.  This is essential to resolve inevitable issues of trust or conflict of interest, and enables the financial planner to stay out of the emotional middle of the situation and operate as an objective resource.

Financial Planning for Divorce, Key #3:  It’s Not Just About Dividing Assets

As with any financial planning, it is important to remember that long-term financial health is a matter of much more than asset accumulation. It also requires an integrated plan for how to effectively grow, protect and even use the assets you keep from a divorce.

Divorcing spouses – particularly the one who was not handling finances in the marriage – will each do well to take a comprehensive new look at his or her financial present and future.  In this regard, an independent wealth manager can prove invaluable.  They offer objective advice beyond just investment management, helping create individualized financial plans encompassing insurance needs, tax strategies, and specific plans for retirement and estates.

Divorce is hard enough – with the right professional advice, at least financial planning for divorce can be made easier.

SUGGESTED ADDITIONAL READING:

The Difference Between a Wealth Management Firm and A Brokerage Firm – And Why It Matters to You