May 25, 2021

Divorce Financial Planning: What is it? Why would I need it?

Going through divorce brings to the surface emotions, decisions, and challenges. Fear of the unknown, especially the financial unknown, can create added stress to an already complicated set of circumstances.

Who is keeping the house? What happens to our savings? Will I have enough income to cover monthly bills – and still reach retirement?

Your attorney will assist with legal matters, and you may have a therapist helping your family through emotional challenges, but many of the decisions you need to make will be purely financial. Yet, studies show that most divorcing couples do not enlist the help of a financial advisor – which can be costly in both the short and long term.

What is divorce financial planning?

Divorce financial planning is a specialized area of financial planning that assists individuals and couples with the important decisions specifically related to the economic impacts of divorce.

While some decisions will impact short term, other choices regarding asset selection/division and dividing future income streams (like pensions) can have lifelong impacts on your future financial health.

Many couples entering into this process start with the goal of maintaining a reasonable and civil discussion regarding the division of their financial assets. This can be an extremely emotional time, however, and best laid plans to maintain a calm and balanced approach can often go awry.

The added stress of dividing everything and moving on can make these conversations challenging, and even threatening, especially to the partner who was not wearing the financial hat in the family.

My personal experience has shown me that fear of the unknown, especially fear of the financial unknown, can trigger many of these disruptions. A couple’s finances are often fraught with emotional bombs even during good times. The added stress of dividing everything and moving on can make these conversations challenging, and even threatening, especially to the partner who was not wearing the financial hat in the family.

The role of a divorce financial planner

The role of the Divorce Financial Planner is to educate all the players, clients, and their attorneys, in the future tax impacts that selecting certain assets over others might create.

We can work with people at any point in the process: before, during or after. Fully understanding what is owned, and what is owed, at the beginning of the divorce dialog can go a long way to maintaining a more rational approach to the process.

Creating a sound financial plan for both partners as part of the dialog takes some of the fear of the financial future off the table and allows people to treat each other with more civility, a desired outcome by most participants – and a more cost-effective approach rather than endless battles and hefty legal bills.

Financial vehicles such as IRAs and 401ks, ROTHs, and pensions can be complicated and not easily understood. Financial products like annuities, mutual funds, and life insurance come in so many sizes and shapes that can be confusing even to financially savvy investors. Small business owners and their spouses have even more complex financial situations that need to be fully addressed.

And let’s not forget the IRS! Understanding how the tax code affects your overall financial outcome based on the assets you select in your property division is key to getting a truly equitable resolution.

It is not unusual to see people making very emotionally driven choices rather than using financially sound logic in asset selection. A financial planner specializing in this area will bring a professional, whole-picture perspective to help you reach desirable outcomes.

Contact a Certified Divorce Financial Analyst

If you or someone you know would find value in learning more about Divorce Financial Planning, please contact me. I welcome the opportunity to see how I can help.


Megan Heintzkill is the Director of Financial Planning at Fortifi Bank. She has worked in financial services for over 25 years and is a Certified Financial Planner (CFP®), Certified Divorce Financial Analyst (CDFA®), and a member of the Financial Planning Association (FPA).

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