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Should you get a divorce financial planner?

By December 1, 2020February 23rd, 2024No Comments

Divorce financial planner: So, you already know that a family lawyer will benefit you when you’re going through a divorce, but have you considered whether or not you should also engage a financial planner who specialises in divorce? Here’s a rundown on why hiring a specialised financial planner for your divorce might be a smart move for you.

Getting divorced is one of those major life upheavals that can lead to a loss of financial security and have a real impact on your quality of life. It’s a time you really need to make the best financial decisions possible, to handle your plans for your next stages of life and the financial consequences of divorce. It’s not just dealing with the immediate financial decisions and ramifications, but working out how to put yourself in the best possible position for your long-term future. Sometimes that path isn’t as clear as it could be and that’s where an experienced divorce financial planner can play a role.

Guiding you towards financial stability and helping set you up for retirement, divorce financial planners use the methodologies of traditional financial planning but tailored to the divorce process. The aim is to help you reach an equitable settlement as well as build solid foundations for your future.

A divorce financial planner usually works with you and your family lawyer to develop the best possible financial objectives throughout the divorce and help you navigate the financial aspects of divorce. You’ll be assisted to prepare for your property settlement, manage the property settlement process and implement the recommendations. Here are some of the ways they can help.

Before settlement

  • Giving you an overall view of your finances

Getting a grip on your financial reality is always number one. Before you head towards a property settlement, a financial planner will help you put together a comprehensive picture of the state of your finances, so you can assess options and prepare for negotiation. This will involve gathering information on your finances, income and expenses. Your financial advisor will be expert at helping you gather all the information and documents you need.

  • Helping you establish the asset ‘pool’

When preparing for a property settlement, you’ll be assembling an in-depth document which sets out the relationship assets and liabilities as part of your financial disclosure. You’ll need to gather all information regarding income, assets, liabilities, expenses and any other financial matters relating to the parties.  Again, your financial advisor has the know-how to help you pull together this historic information quickly and accurately, which will help reach a workable settlement sooner.

  • Pre-property settlement analysis

A financial planner can help by determining which assets would be best for you keep, sell or trade. They can also evaluate liabilities and superannuation matters and help you work out whether you can stay in the family home, if that’s something you want.

  • Future planning

This is a biggie, of course. The goal is to create a strong financial situation after your property settlement is finalised and to develop a positive mindset towards being financially prepared for the future. You’ll be helped to identify financial goals, develop a workable budget, understand cashflow, discuss investments, set retirement goals and perhaps even rethink your lifestyle, post-separation.

  • Answering all your questions regarding separation and finances

For example, what happens to gifts and inheritances? What happens to liability for your ex’s debts if they default on payments? How can you best protect your assets? What happens when you don’t have a prenup? And one of the most important ones for many people: how to work out if you can afford to stay in the family home, and what to do if you can’t.

During settlement

A financial planner who specialises in separation can provide expert guidance during your negotiations with your ex throughout the divorce process. Here are just some of the ways they might help.

  • Understanding timelines. Some decisions you make may have lifelong consequences so it’s crucial not to rush. Both your family lawyer and your financial advisor should be consulted to work out which decisions must be made immediately, which have a bit of wriggle room and which ones can be put off for a longer time.
  • Helping you separate “emotional assets” from practical ones. You know, these are the ones that you want to “win” rather than let your ex have. They may have no real financial benefit, only an emotional connection of some kind. Instead, a financial advisor will help you focus on assets that will work for you going forward. For example, rental property, or stocks/other growth assets and investments.
  • Helping you stay level-headed during the process and not make rash decisions. You should always give yourself the benefit of thinking through decisions before committing to them. For example, there can be a temptation to liquidate assets during divorce, but often it’s much better to stay invested, and a financial advisor will advise on this.
  • Uncovering assets. A financial planner also has strategies for uncovering hidden assets and might help you discover if your partner is not fully disclosing all assets.
  • Explaining your options regarding settlements and providing projections for the long-term impact of decisions.
  • Reviewing and analysing settlement offers to determine what finances would look like if agreed. Identifying any weaknesses where you could offer a counterproposal.
  • Understanding and explaining the tax consequences of your decisions relating to property, superannuation, child support, spousal maintenance etc.
  • Helping you work out if when and how to refinance your mortgage.
  • How you can protect your credit rating from any negative action taken by your spouse.

Important note –you should always check with your lawyer regarding any changes you are considering making relating to assets if changes will occur before your property settlement is finalised, as some moves can be illegal. On the other hand if worried your ex will make unauthorised changes to your financial circumstances, you may be able to get an injunction to prohibit that.

After settlement

There are many ways a divorce financial planner can help after settlement as well. For example:

  • Assisting you with post-separation asset transfers.
  • Determining the best way to invest assets divided in the property settlement as previous asset directives may no longer be appropriate.
  • Providing post-divorce investment planning and implementation of recommendations. Ideally, a plan is implemented that allows you to rebuild your financial stability as fast as possible.
  • Helping you protect and grow your remaining assets, generating more future income and saving more for retirement.
  • Reviewing liabilities and ways to reduce your debt to increase your net worth.
  • Reviewing tax implications of superannuation and investment plan distributions.
  • Essentially, helping you reestablish yourself financially for your long-term future.

Estate planning

You’ll also be wanting to create a new estate plan (covering finances and property as well as health) and a financial planner can also assist here. An amended estate plan can set out the new division of assets, who is entitled to your superannuation and who is to be the beneficiary of your insurance policies.

Do you already have a financial planner?

Even if you already have a financial planner, you can find one specialising in divorce to work with you only during the property settlement process, and afterwards hand you back to your existing planner with exact recommendations for your post-divorce strategy.

If you prefer to remain with your existing planner, they can still advise you on divorce financial planning, but it’s worth considering a specialist with experience navigating divorce finance matters.

You can also find general information on money and divorce at Moneysmart.gov.au.

With so much information out there, you really need someone who can put things into perspective for your specific circumstances. If you aren’t sure where to start looking for a divorce financial planner, we can put you in touch with preferred and trusted financial advisors who can help.

Or, if you need assistance with a property settlement or any other family law matter, please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law.

Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.

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