Contemplating Divorce? Here’s What You Should Do First
If you’re contemplating divorce, what preliminary steps should you take to prepare?
“It sounds so obvious, but if you’re going to go down this road, you need to know your cash flow,” said certified financial planner Chris Cipolla, wealth advisor and certified divorce financial analyst with RFG Advisory in St. Louis, Mo.
“Clients are coming in completely blind,” Ms. Cipolla said. “They don’t always know what they should, such as what liabilities they owe (secured or unsecured), what assets the couple has, where those assets are, etc.”
She added that before you declare your intention to divorce, you need to search for this information. One thing you can do is pull your credit report to see what liabilities are in your name.
According to Ms. Cipolla, here are the four most important questions for women to answer if they are seeking alimony/maintenance. How much income do you need? Can your spouse afford to pay support? How long have you been married? Are there any health issues that could impact your employment?
Other important steps she advises to take include:
- Building a team. This should include an attorney who is the right fit, a tax professional, a CDFA (a financial planner who specializes in divorce), an emotional support system or mental health counselor, and a school counselor, if children are involved.
- Building a budget. Do the best you can and your CDFA can help you expand it.
- Determining what’s important to you. When it comes time for negotiations, be clear on what you need in order to move on. Knowing what you need in terms of financial support and being able to categorize possessions into “really want”, “don’t want”, or what’s negotiable.
Who/What is a CDFA®?
“ A certified divorce financial analyst [CDFA®] is a neutral financial professional who works within the divorce process to help couples achieve equitable settlements,” Ms. Cipolla said.
CDFA® practitioners review settlement proposals for fairness and efficiently analyze the numbers and issues, such as withdrawal penalties, retirement plan rules, cost basis on property and investments, pension valuations, etc., she explained.
“It’s important to have financial planning expertise in addition to legal expertise on your team,” Ms. Cipolla said. “A CDFA® understands finance and the tax implications of financial decisions within divorce.”
Neither RFG Advisory and its Investment Advisor Representatives nor Private Client Services and its Registered Representatives provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting professionals for guidance on such matters.