In most situations, you will file for a divorce in the state in which you and/or your spouse live. If you and your spouse own property in different states or you live apart, you might be able to select the state in which to file. In those situations, you and your attorney should evaluate the respective states’ divorce laws to determine the best choice. Among the items to consider are the length of time it will take to grant a divorce, the age of majority used in determining how long a parent is required to pay child support (for some states it is 18 and others it is 21), and filing and procedural rules, which can vary significantly.

In addition, some states have requirements that limit options even if a couple has multiple homes or live in separate states. For example, some states require that child custody be determined by a court in the state in which the children live; other states require that decisions about property must be decided by a court in the state where the property is located. Divorce laws also vary concerning other matters such as how prenuptial agreements are handled and whether alimony is allowed.

If you do have a choice on where to file for divorce, it’s important to consult your attorney, and possibly a financial advisor, to ensure you make the best decision for your unique situation.

Identifying Your Priorities

Once you have gathered all of the information that your attorney will need, you can start to consider the bigger picture questions. Initially, many people simply focus on the settlement itself and how much it should or could be. Instead, a lifestyle analysis is needed to identify the priorities that need to be covered.

Questions to consider as a part of this lifestyle analysis include:

  • What type of post-divorce lifestyle do you want, and is it realistic based on your assets and likely settlement?
  • How much income will you need for the lifestyle you desire?
  • Where will you live?
  • If you’re facing divorce after 50, and you haven’t worked outside the home for many years, will you go back to work? If so, will you need to retrain first? How long will that take, and how much are you likely to earn when you re-enter the workforce? If you’ve never worked outside the home, it may be unrealistic to assume you’ll be able to get a job – especially if retirement is just a few short years away.
  • When will you want to retire or need to start tapping your savings?
  • Will you want or need to leave money to your children or grandchildren?
  • Will you want to donate to charitable or other organizations?

Your analysis should consider your current assets, both liquid and those that can’t be sold until later, along with current and future expenses. Examples of future expenses could be your next home, college tuition, weddings for your children, vehicles, and healthcare. You’ll also want to estimate your eventual Social Security benefits, potential inheritances, taxes, and inflation. All of this information can help you determine how much you’ll need to save, how much risk you can afford to take with your investments, and how much you can spend on a monthly and annual basis.

A lifestyle analysis will consider both wants and needs, and how they fit into the life and lifestyle you desire. For example, you might choose to work and save over a longer period, or invest more aggressively, so that you might be able to afford to travel or spend on other “wants” in the long term, or you might choose to save less now, or select safer, lower-risk investments, and live a more frugal lifestyle later. These are decisions that have the potential to affect you, and possibly your children, for the rest of your life, and they require careful thought and deliberation.

By working with a financial advisor throughout the divorce, you will have a better understanding of your current and future financial status. An advisor can help you pursue your plan, make adjustments as needed, maintain financial independence, and retire comfortably.

 

Wealthspire Advisors is the common brand and trade name used by Sontag Advisory LLC and Wealthspire Advisors, LP, separate registered investment advisers and subsidiary companies of NFP Corp.
Certified Divorce Financial Analyst (CDFA) professionals must develop their theoretical and practical understanding and knowledge of the financial aspects of divorce by completing a comprehensive course of study approved by the Institute for Divorce Financial Analysts. CDFA professionals must have two years minimum experience in a financial or legal capacity prior to earning the right to use the CDFA certification mark.
This information should not be construed as a recommendation, offer to sell, or solicitation of an offer to buy a particular security or investment strategy. The commentary provided is for informational purposes only and should not be relied upon for accounting, legal, or tax advice. While the information is deemed reliable, Wealthspire Advisors, LP cannot guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with regard to the results to be obtained from its use. © 2020 Wealthspire Advisors

Aviva Pinto, CDFA™, CDS™

Aviva Pinto, CDFA™, CDS™ is a managing director in our New York office.