Helping Clients Face Divorce

[kcjenkins]

May 16, 2015

You have heard the sad statistics: By one estimate, each year 3.4 percent of married Americans experience a divorce. Many if not most of them blunder into it without advance detailed consideration of how divorce will impact their finances. Even when couples anticipate an “amicable” break-up, the situation can deteriorate quickly, and one party to the divorce may wind up on the short end of the stick.

The professionals at HD Vest offer the following short list of preparatory steps you or your clients can take to ensure that the ultimate outcome is as equitable and manageable as possible:

1) Familiarize yourself with the applicable state’s divorce law. Different states have different approaches to property and liability ownership. Your clients’ attorneys are the professionals, of course, but it’s essential to know the basics, and better to have a deeper grasp.

2) Run a credit report. This gives your client a head’s up about any possible unknown debts their spouse has incurred without your client’s knowledge.

3) Take an inventory of tangible and financial possessions. This will need to be done eventually anyway, but the sooner the better in case the process leads to any surprises, such as long-dormant retirement plan or taxable asset accounts.

4) Secure the most recent statements for all accounts, and appraisals for tangible property with any potentially significant value. One less obvious benefit to the appraisals is to smooth out the process of dividing possessions with sentimental value to one party that might also be thought to have economic value, but actually do not.

5) Establish individual banking, investment, and credit card accounts in your client’s name, to be ready for the separation of assets.

6) Create a pre- and post-divorce budget. Assuming the couple isn’t operating under an up-to-date budget, creating a new, accurate one will establish the foundation for a prospective post-divorce budget that might include new expense categories, such as child care. Although the resulting picture might indicate that tightly restrained spending may be in your client’s short-term future, the knowledge of what to expect — and that it will be survivable — can take some of the emotional strain out of the upcoming divorce process.