If you are considering a divorce, you are not alone. Statistics show that almost 50% of all marriages in the United States will end in divorce or separation.1 While divorce is becoming less common for younger adults, rates for those adults age 50 and older has roughly doubled in the past 25 years.2 Given these trends, the need to understand the divorce process becomes that much more important. While most people expect the heightened legal and emotional factors that come with a divorce proceeding, the potential financial complexities are easy to underestimate and yet can be among the most important decisions in one’s lifetime. Therefore, it is important to include a financial professional on your team that specializes in divorce.
Beyond the Divorce Attorney
A divorce attorney is paid to do one thing well – successfully implement a legal divorce for the client. However, a thorough understanding of the financial implications of a divorce is critical to an equitable legal settlement and peace of mind during and after a divorce process. A professional who specializes in divorce financial analysis and planning, such as a Certified Divorce Financial Analyst, or CDFA®, can help you receive a settlement that addresses the full scope of your potential financial needs.
Modera Wealth Management offers its clients access to finance and planning professionals, such as CDFAs®, who are experienced with divorces. Here are several examples of value-added services that a Modera Wealth Management professional can provide during and after the divorce process:
Educate, Guide, and Organize: You may not be the one that managed the finances when you were married; and even if you were the “money person”, many financial issues in your life are about to change in a meaningful way. Modera Wealth Management can assist both during and after the divorce proceedings to help you through the process, organize your finances, and reestablish your financial independence.
Anticipate, Budget, and Forecast: Modera Wealth Management professionals can also help you think about and forecast how potential divorce settlement scenarios will affect you. This encompasses your more immediate needs as well as future income and expense planning for post-divorce independence, including child support, medical costs, retirement needs, income tax planning, insurance requirements, and inflation effects.
Valuation of Assets: Many different types of assets can be involved in a divorce, including bank and investment accounts, retirement accounts, pensions, insurance, primary homes and rental property, or even business ownership. Modera Wealth Management can assess the values of both your liquid and illiquid assets and provide a statement of net worth to support your legal proceedings. In many cases, a legal document called a Qualified Domestic Relations Order (or QDRO) is required when it comes to dividing up retirement assets in a divorce. A Modera professional can assist you and your attorney through the preparation, approval, and submission of a QDRO to the court.
Supervise the Vesting and Transfer of Assets: Your former spouse may own assets that have little value today but could be significantly more valuable in the future (for example, stock options that vest or appreciate in value only after a set period of time). A Modera CDFA® can properly factor in such assets to help you receive a more equitable settlement.
Income Taxes: A Modera CDFA® can analyze your historical tax returns for hidden or improperly valued assets that may have understated your income while you were married. For example, was your taxable income understated due to unusually high business or rental property expenses, or large capital loss carryforwards? Such temporary issues could result in a lower divorce settlement amount than you deserve.
Estate Planning: Modera Wealth Management can also help you analyze and appropriately modify beneficiary designations across various documents and accounts, including your will, trusts, retirement accounts, and life insurance policies. Doing so will help ensure your wishes are updated and properly reflected after the divorce proceedings are complete.
Life Insurance: Alimony payments may sometimes be required as a result of a divorce settlement. If this is the case, Modera Wealth Management can help you determine whether life insurance should be included in your divorce settlement specifically to cover potential loss of alimony and/or other support payments (i.e., in the event your former spouse passes away).
Calm and Steady Advice: The process of executing a divorce can be a period filled with extreme emotion and confusion. It is invaluable to have a calm but experienced hand help guide you through the potential financial issues relating to your divorce.
Modera Wealth Management offers a variety of financial planning resources to its clients, including access to divorce specialists such as Certified Divorce Financial Analysts®. If you are considering a divorce, we encourage you to consult your Modera Wealth Manager, who can put you in touch with the appropriate professionals to guide you through the process.
Modera Wealth Management, LLC (“Modera”) is an SEC-registered investment advisor with places of business in Massachusetts, New York, New Jersey, Pennsylvania, North Carolina, Georgia and Florida. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. SEC registration does not imply any level of skill or training. For information pertaining to our registration status, fees and services, please contact us or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov) to obtain a copy of our disclosure statement set forth in Form ADV Part 2A. Please read the disclosure statement carefully before you invest or send money.
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