Financially Planning a Divorce

Financially Planning a Divorce
By: James Walsh

It has also been proved that much of the divorce-induced negative experiences are due to the lack of financial resources rather than the very process of separation. In light of these facts, it is important that you must first prepare financially, if divorce is in the offing.

Divorce Financial Planning

If you leave the monetary aspect of your divorce unplanned, or if you are swayed by emotions while negotiating a settlement, you might land yourself in potential disaster. To prevent the occurrence of post-divorce hardships you have to consult a divorce financial planner who will help you make informed choices.

Quite a few people fail to consult a divorce solicitor and subsequently miss out on:

• Gaining a clear perspective of the current and future financial scenario.

• Gathering the necessary knowledge to negotiate effectively to reach a fair and equitable settlement

• Minimising taxes and legal fees

Avoid such slips.

A divorce financial planner will review your current financial situation by compiling, organising and valuing the available assets in the backdrop of the existing liabilities and future estimated needs. This information is utilised to prepare a budget.

The prepared estimate is used in the pre-divorce period to work out a settlement by factoring in the future earning potential, the prospective educational expenditure of your children and the retirement and insurance needs of yours.

After the process of divorce is complete, the financial planner oversees the asset transfer and manages your future investments. The returns on the investment are monitored and the financial plans are updated accordingly.

Importance of the Gamut of Services Offered by the Divorce Financial Planner

Spouses, who plan their divorce financial agreements without soliciting professional help, often reach non-enforceable settlements. Their ignorance-induced decisions are based more on notional and arbitrary factors rather than the real facts. Moreover, they usually fail to reckon the future rise in expenditure or the inflationary trends that might set in. Subsequently, they sign lopsided agreements and land in financial mess.

Divorce financial solicitors can protect you against such hardships by helping you visualise your financial future in the post-divorce phase. Their help is especially important if your spouse earns more than 3/4th of the family income and if your married life has crossed the 15-year tenure.

The divorce financial planner will help you

• Maintain your home in the long run

• Have adequate funds for alimony and child support

• Avoid unexpected tax liabilities

• Make you retain retirement benefits and

• Ensure that your future financial picture meets your current life styles or expectations by making proper investments and getting adequate pension.

Many people make the mistake of stretching the services of a divorce solicitor to serve the requirements of a therapist and a financial planner too. Needless to say, such arrangements prove totally unsatisfactory. Divorce lawyers are trained in family law and have inadequate knowledge of finances and monetary conditions. Moreover, the client ends up losing much money by paying a solicitor by the hour.

Be Informed and Avoid Costly Mistakes

Apart from this, you might make a few other common yet expensive mistakes that would leave your financial future jeopardised. One of the most frequent mistakes, divorcing couples make, is an improper distribution of assets. You might opt for illiquid assets while your spouse selects liquid resources. Such a distribution might appear equitable, but if you retain the home you might fail to maintain it in the absence of a cash flow and eventually sell the house.

Another costly ignorance-induced mistake is failing to reckon the taxes to be paid. You might accept assets that invite much capital gain in comparison to your spouse who would have to pay less of tax.

Many more mistakes are possible, for the financial realm is massive and couples make mistakes out of half knowledge. As you lack the requisite knowledge, you might fall into well-laid traps and once you turn a signatory to an unfavourable settlement, changing it is often difficult. Only a financial planner can secure your economic future.

Article Source: http://www.articlesbase.com/divorce-articles/financially-planning-a-divorce-325131.html

About the Author: James Walsh. James Walsh is a freelance writer and copy editor. If you want to find out more about a solicitor managed divorce see http://www.managed-divorce.co.uk