Navigating Divorce

Question:  I’m a woman getting ready to file for divorce. What suggestions do you have as I begin this process? 

Answer:  In the United States, approximately 50% of married couples will divorce. In the last ten years, divorce and marriage rates have declined but vary widely by state. According to the U.S. Census Bureau, incompatibility (43%), infidelity (28%), and money issues (22%) are the primary reasons for divorce.   

There are practical tips for financially and emotionally navigating life before, during and after a divorce. Going through a divorce is one of the most stressful events anyone can go through and that may be truer for women for several reasons.

According to a study by Pew Research, in the U.S., women’s financial contributions to marriages have steadily been increasing in the last four decades, but men still earn more in 69% of heterosexual relationships. Interestingly, women’s finances tend to take a bigger hit than men’s after a divorce. The impact includes Social Security benefits, retirement savings and even credit scores. Here are some considerations for now, later, and into the future.

Before

Before you file for divorce, it’s important to prepare for what’s to come – emotionally and financially. Putting these recommendations in place will help:

1. Build a circle of trusted people around you. Surrounding yourself with friends and family is expected, but don’t overlook professional support. A counselor can provide unbiased emotional support, and a financial advisor of your own will help you navigate the tricky financial considerations.

2. Gather all documentation. It’s smart to pull together any legal and financial documentation and be as organized as possible. 

During

The costs associated with divorce will depend on your circumstances. The most important factor is how much assistance you’ll need from an attorney. This is based on whether you and your spouse agree on important issues and how quickly disagreements can be resolved. 

According to a survey by Nolo.com, the national average hourly rate of divorce lawyers was $270 and varies greatly by region. The survey showed that on average across the country, attorney’s fees from start to finish totaled $11,300 for a divorce. This number varies based on the level of complexity, if the divorce is contested, and if there will be alimony and/or child support in the settlement. 

While navigating uncertainty in the short-term, it can be helpful to focus on a few things that you can control to alleviate some of the stress. These tips are designed to help you take care of yourself while going through the process of divorce. 

3. Practice self-care. Take time to grieve your relationship and process your emotions. For you, this may mean reading a book, volunteering, meditating, exercising to reduce stress, or practicing affirmations to stay positive.

4. Think clearly and fairly. Do your best to create stability for any children involved. Then, think beyond which assets you want to retain and consider what you can maintain as well. For example, if you want to stay in the family home, add the maintenance to your budget so you can make it happen.

5. Update your beneficiaries. Even after your divorce is finalized, your soon-to-be ex-spouse could be entitled to your assets if he or she is listed as a beneficiary. Be sure you make changes official on insurance policies and retirement accounts once you’ve made that decision.

After

Once the divorce is finalized, it’s important to start fresh and focus on your new reality. Here are a few suggestions.

6. Consider tax consequences. After a divorce, you will need to consider how filing individually will affect your tax bill. Other considerations are who will claim dependent children and how the transfers or buyouts of jointly owned assets will impact you in the first year. A financial advisor can help you navigate this.

7. Detail co-parenting responsibilities. In addition to child support and parental rights, it’s just as important to decide who will take on responsibilities like monitoring your children’s social media, scheduling the children’s activities and other commitments.

Next steps

When going through a divorce surround yourself with support including both personal and professional confidants. Asking for help is a sign of strength. Stay focused and invest accordingly. 

The opinions expressed are those of the writer as of January 26, 2021, but not necessarily those of Raymond James and Associates, and subject to change at any time. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit or protect against a loss in a declining market. This material is provided for educational purposes only. Past performance is no guarantee of future results. Material is provided for informational purposes. Consult your tax professional and financial advisor before making any investment decisions. 

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” This article was provided by Darcie Guerin, CFP®, First Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at (239)389-1041, email darcie.guerin@raymondjames.com Website: www.raymondjames.com/Darcie.