Whether they are full-time working professionals, part-time workers or devoted homemakers, one common thread that connects divorcing women is the need to create a secure financial future. Julie Meissner, founder and CEO of Treehouse Wealth Advisors in Walnut Creek, Calif., gives some financial planning advice and examines how a woman’s employment status can impact these considerations.
Larry Light: I suspect the first step in to clearly understanding the financial situation. How do you recommend beginning this process?
Julie Meissner: Start with compiling all financial documents, including bank statements, investment accounts, debts, property records and tax returns. This step becomes even more critical if there are children. Asset division, including retirement plan assets, can be significant for homemakers with fewer assets in their name. Regardless of income level, women going through divorce need to become familiar with the laws in their state and be proactive in protecting their rights to a fair share of marital assets.
Light: Divorce can be overwhelming. What’s the best way to lay out a plan for the future?
Meissner: It is a good idea to start by identifying short-term objectives, such as covering living expenses, and long-term goals, like saving for retirement or children’s education. Setting realistic goals that reflect the new circumstances following divorce is essential.
Light: What about budgeting to managing post-divorce finances effectively?
Meissner: It is essential to evaluate all expense items and ensure that the budget aligns with a new post-divorce financial reality, including income and support that will be received or must be paid. If there are children, child support and alimony may play a significant role in budgeting. For homemakers who may not have a regular income of their own or one that is significantly lower income than their spouse, it is crucial to create a budget based on the new financial situation. Child support and custody arrangements become essential considerations for financial planning.
Light: Will there be an impact on credit?
Meissner: Credit may be affected during and after divorce because household income is affected, normal bill-paying may be disrupted, and finances and debt may be unclear. Taking proactive steps to keep credit on track include monitoring credit regularly and addressing any discrepancies promptly. To protect credit during divorce, consider closing joint accounts or refinancing shared debts to separate financial responsibilities.
Light: What other considerations are there?
Meissner: Take the time to understand employer-provided benefits, such as health insurance, retirement plans, or stock options, and their implications during and after the divorce. Some benefits may require adjustments or updates to reflect the new marital status and financial situation. Homemakers who are not employed also need to consider health insurance coverage post-divorce.
While dividing retirement accounts can be a complicated process during a divorce, it is imperative to understand rights concerning retirement accounts and pension plans. Then after a divorce, updating an estate plan is crucial. Action items include reviewing and updating beneficiaries on life insurance policies, retirement accounts and other financial assets. Remember that estate planning documents, such as wills and trusts, should reflect post-divorce circumstances and wishes.
Light: What about women who are the primary wage earners?
Meissner: As a primary earner, you already have financial independence. However, you need to take the time to identify your short-term and long-term objectives, considering factors such as asset preservation, maintaining your lifestyle, funding your children’s education and planning for retirement.
It is crucial to have a comprehensive understanding of your financial picture, including real estate, investment accounts, retirement funds, business interests and any outstanding debts or liabilities. This knowledge will enable you to make informed decisions about asset division and financial settlements. By being proactive and strategic, you can protect your wealth, maintain financial stability and secure your future.
Light: Who can help with this?
Meissner: Seek the assistance of experienced professionals such as a divorce attorney specializing in high-net-worth cases, an experienced financial planner and a tax advisor. They can help guide you through complexities unique to affluent, professional women. Their expertise will protect your interests and help you achieve the best possible financial outcome during a divorce.
Divorce can have significant tax implications, particularly for high-net-worth individuals. Engage your tax advisor to assess the tax consequences of asset division, alimony and child support. With their guidance, you can implement tax-efficient strategies that optimize your financial position during and after the divorce.
As an affluent professional woman, you likely have a diverse portfolio of assets and investments. An experienced financial planner can help you navigate the complexity of a high-asset divorce, protecting your retirement savings and other assets. A financial planner can guide you in reevaluating your retirement goals and assess how the division of assets may impact your retirement plans. They can help you make informed choices about adjusting contributions and investments to maintain retirement security.
Working with an attorney will clarify whether you may be entitled to or required to provide alimony. Your attorney will work with you to negotiate a fair alimony agreement that aligns with your financial situation and future needs. Balancing your financial responsibilities with your personal goals will be critical.
Light: Any final thoughts to share?
Meissner: Taking control of finances can empower women to make informed decisions. Women going through a divorce can educate themselves about financial options, stay informed about their rights and make decisions confidently as they prepare for their future. Navigating the financial complexities of divorce can be overwhelming. It is worth reaching out to an experienced professional financial planner to help develop a comprehensive financial plan tailored to your unique situation.