Americans have been barraged for years about the failing institution of marriage and the soaring divorce rates. In reality, though, according to a 2014 New York Times article, “the divorce rate peaked in the 1970s and early 1980s and has been declining for the three decades since. If the trend continues, nearly two-thirds of marriages will never involve a divorce.” Although great news for the sanctity of marriage, there are still millions of families affected by divorce. I guarantee we all know a friend, neighbor, colleague, or even a family member dealing with the uncertainty of divorce at this very moment.
Divorce can be extremely stressful for all parties involved. The emotional toll, as well as the physical and psychological impact on the family, can be devastating. Dealing with financial issues and the allocation of assets can be overwhelming and many individuals don’t know where to turn for assistance in this area. It is extremely important to ensure your finances are set up correctly to secure your future financial well-being.
Steps to take to ensure both partners are protected:
If you don’t have a Financial Planner, find one that you feel comfortable with. Often, one member of the couple took care of the finances, and therefore the other person is not familiar with any of the shared financial accounts. Start early and begin to build a synergy with a professional who will help you understand what financial steps to take. During this time, individuals engage the services of attorneys who help guide the legalities of divorce and may look to various counselors or therapists to help with their emotional state of mind. Yet, equally as important and sometimes overlooked, is to employ the services of a financial professional whose expertise in the financial arena is essential for the stability needed as your new life emerges.
Oftentimes, divorce can be very contentious and therefore individuals make hasty decisions regarding the division of their assets. One may end up with the home and the other ends up with cash. It is so important to take emotions out of the equation and not have any knee-jerk reactions when the important questions arise regarding who gets what. One suggestion may be a co-ownership until the house is sold. A house is a hard asset that can’t be turned into cash too easily. Cash is extremely important for emergency purposes and with so many changes happening in your life at one time, you want to ensure that you can cover unplanned expenses that may arise.
It is extremely important that once the dust has settled you develop your own investment plan. Knowledge is power. By starting fresh and new, you are empowering yourself to begin the process of creating financial security for yourself. Take the time to reflect on past financial decisions which will help guide more fruitful future financial decisions.
In the first year, you never know how much you will need or how your lifestyle may change. These are uncertain times that call for the financial flexibility to adjust your investment plan as you begin the transition to your new life. Resist the urge to make any large financial purchases as well until you have had the time to clear your mind and assess which life path you wish to pursue.
Divorce is an unsettling time for all involved. But, taking care of your finances and arming yourself with the right financial tools will help alleviate some of the unknown stressors during this period of your life.
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