Dino Zavagno recently delivered an excellent presentation on how to plan, prepare and gain the best financial footholds to minimise the heartache and stress for those getting divorced by ensuring their financial affairs are in order.
Unfortunately, a significant number of marriages end in divorce. At a presentation to a major Law firm in Hong Kong, Dino Zavagno of Gladstone Morgan explains why as well as speaking to your solicitor, divorcing couples should also obtain the advice of an independent financial adviser (IFA) In particular one who understands the challenges facing divorcing couples.
As a result of a divorce existing financial arrangements often need to be changed. In his presentation Dino Zavagno outlines the most common areas to consider and how Gladstone Morgan can help.
Divorce can strain finances as well as emotions. But with some preparation and financial planning during and after divorce, you can protect your financial interests and take charge of your future well-being.
Planning for the future is an essential part of every divorce settlement.
Separating or divorcing couples often face a major financial transformation. The bottom line is that two households must now survive on the same income formerly supporting one. Typically, if financial planning takes place at all, it’s after the divorce, when financial planners help individuals take stock of their finances and move forward.
Divorce financial planning, however, takes place at the start of the process when individuals first choose to go their separate ways. With early entry into the process, divorce financial planners can provide the comprehensive and accurate financial information necessary to reach a workable agreement. Uniquely qualified to make long-term financial projections, divorce financial planners integrate the methodology of financial planning directly into the divorce process.
Since settlements are in large part financial, divorce financial planners can explain options, help set priorities and lead a client through the hard choices ahead. Often, the financial data on which settlements are based is unreliable, which can lead to future problems for one or both parties. Divorce financial planning increases the accuracy of financial information so that both parties achieve workable settlements quicker and accept realistic lifestyle changes when necessary. Settlements achieved with the help of a financial planner are less prone to problem or error.
Some steps to take before your divorce
1) Prepare a budget to follow until your divorce is final.
2) Talk to a financial adviser about financial planning in and after divorce.
3) Compile monthly bank statements; make copies for your lawyer.
4) Locate all tax returns filed jointly or separately and make copies.
5) Make sure all taxes have been paid to date.
6) Check any safe-deposit boxes.
7) Avoid large purchases that may cause financial complications.
8) Don’t move out before consulting your lawyer.
9) Don’t transfer or give away jointly owned assets.
10) Never sign any document until your lawyer reviews it.
11) Assess your current and post-divorce financial situation
12) Look ahead, not back. Rework your long-term goals. This can help you plan for the future while you manage your daily needs.
13) List income and expenses you’ll have once you are divorced. Do you earn enough to support yourself and your family?
14) Identify your assets. Make a list of all your assets, their value and whether they are owned jointly or separately. Which assets do you really want and which ones are you willing to let your spouse keep?
15) Deal with liabilities. Will you be able to pay outstanding debt on the assets you keep? Assess your and your spouse’s liabilities and obtain credit reports.
16) Know the employee benefits that you and your spouse are entitled to, as well as the life, health and disability insurance policies that you both own through your employers. If you have children, whose health insurance plan will be used to cover them?
17) Consider child or spousal support. Will you be paying or receiving child support or spousal support?
Other financial considerations during a divorce
Going through a divorce requires you to examine your entire financial life. Your lawyer, tax professional or financial adviser can help you work through any other financial questions that may come up:
– Should any beneficiaries change on your life insurance policies, investments, wills, etc.?
– What are the tax consequences of support you may provide or receive, such as spousal or child support?
– How will you handle your tax return, depending on the timing of your divorce?
– Will your home be transferred to either spouse as part of the settlement?
– How we can help with financial planning in divorce
– Life can change at any time. Our approach to financial planning in divorce is expressly designed to adapt to evolving needs.
– A Gladstone Morgan financial adviser can help you with the complex financial decisions you face during a divorce and plan for your future goals.
Please also see our downloadable retirement report “When should I begin saving for my retirement?” document which you can download below.
It illustrates the financial benefits and reasoning behind beginning your retirement planning and saving early:
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