Navigating Divorce: Essential Financial Considerations for Advisors
Divorce is a challenging and emotional time for many families, and financial advisors play a crucial role in helping their clients navigate the complexities of the process. In this blog post, we explore some of the most commonly overlooked aspects that financial advisors need to address when working with clients going through a divorce.
One important aspect that often gets overlooked is the issue of credit. Michelle Smith, CEO of Source Financial Advisors, emphasizes the importance of maintaining good credit standing for both parties involved in the divorce. Establishing credit in the non-monied spouse’s name is crucial, especially for women who may find themselves at a disadvantage post-divorce without their own credit history.
Another overlooked issue is the handling of the marital home, particularly when there is a mortgage involved. Matt Kilgroe, president of Cyndeo Wealth Partners, warns that banks can be difficult to deal with when one spouse wants their name off the mortgage. It is essential to address this issue before finalizing the Marital Settlement Agreement to avoid potential complications down the road.
Life insurance is another important consideration during divorce proceedings, according to Robert Schein, chief investment officer at Blanke Schein Wealth Management. Ensuring that premiums are controlled and beneficiaries are properly designated can prevent lapses in coverage and potential disputes in the future.
Tax implications are also a critical aspect that financial advisors need to address when working with clients going through a divorce. Craig Robson, founding principal at Regent Peak Wealth Advisors, highlights the importance of understanding the tax treatment of various financial components, such as retirement plans, alimony, child support, and equity compensation. Overlooking these tax implications can lead to significant financial consequences for both parties involved.
Lastly, Harry Grand, partner at Angeles Wealth Management, emphasizes the emotional and psychological impact of divorce on clients. Financial advisors need to provide not only practical financial advice but also emotional support and empathy during this difficult time. Ignoring the emotional aspect of divorce can hinder clients’ ability to make sound financial decisions and move forward effectively.
In conclusion, navigating a divorce can be a complex and challenging process, but with the guidance of a knowledgeable and empathetic financial advisor, clients can successfully navigate the financial aspects of their divorce and move forward with confidence.
