By Steve Erfle, CFP®, CDFA™, MBA
Financial planning for divorcees is highly individualized. Many people (and even some of our clients) don’t realize just how much their net worth influences their post-divorce financial plans.
For instance, imagine a low-to-middle-income couple with a house, two vehicles, and a joint bank account. Now imagine a high-net-worth (HNW) couple with a primary residence, a portfolio of rental properties, a small business, and two substantial brokerage accounts.
Financial planning for divorcees in the latter category is much different (and often much more complex) than planning for those in the former. Here’s a closer look at some of the key differences.
When Dividing Assets, Creative Planning Helps
In any divorce, the division of assets is often a point of contention. When helping with financial planning for divorcees, we’ve found that taking a creative approach to asset division (instead of just trying to split every asset 50/50) often works best.
For example, suppose you’re a business owner. When dividing your assets in a divorce, you might decide to sell the company and split the proceeds.
This might work in some cases, but in our experience, it’s often in both parties’ best interests to think outside the box. For example, if you would rather keep your business, your spouse might be able to have more liquid assets after the divorce. This course of action could benefit both of you in the long run.
Here’s a strategy that often helps streamline the process:
- Ask each party for their goals.
- Put together a spreadsheet of possible outcomes.
- Discuss these outcomes with the clients.
Given the complexity of financial planning for divorcees with HNW, consider working with a Certified Divorce Financial Analyst® professional. A CDFA® professional is a financial analyst who has undergone rigorous training in the financial picture of divorce.
As a CDFA® professional, I focus on more than the immediate division of assets. I also take the time to understand each asset’s tax situation and potential growth opportunities.
Financial Forecasts Are Critical
Part of financial planning for divorcees with high net worth is helping both parties verify that they’re making sound long-term decisions. That’s why CDFA® professionals often run future financial forecasts before the asset-division step is finalized.
Future financial forecasts can offer valuable insights:
- The long-term growth potential of each asset
- The tax liability of each asset
- Each party’s risk exposure
The forecast can also tell whether the proposed asset division is sufficient to meet each party’s financial needs.
Look for Hidden Income or Assets
Financial planning for divorcees with HNW involves dealing with high-dollar assets. Unfortunately, some spouses try to come out ahead by hiding income or assets. Not all financial advisors understand how to locate hidden assets, but this is an integral component of CDFA® training.
Because of the unique challenges often associated with financial planning for divorcees with HNW, some divorce attorneys recommend that their HNW clients consult a CDFA® professional.
We Can Help With Financial Planning for Divorcees
At Thrive Wealth Management, LLC, we understand that the stresses of divorce extend far beyond finances. When we go through financial planning for divorcees with HNW, we aren’t just trying to give you a positive financial outcome; we also want to streamline the process as much as possible.
Successful financial planning for divorcees often involves coordinating with multiple professionals. Our team can work with your divorce attorney to help you navigate this trying time and emerge more financially independent.
If you want to learn more about how we may be able to help, contact us online today. To schedule a meeting, call (215) 376-5530 or email steve@thrivewealth.com.
Frequently Asked Questions About Financial Planning for Divorcees
What can make financial planning for divorcees with high net worth more complex?
Financial planning for divorcees with high net worth can be more complex because assets often include businesses, real estate portfolios, investment accounts, and other high-value holdings with unique tax and growth considerations. Unlike simpler divorces, HNW cases typically require evaluating liquidity needs, future cash flow, tax implications, and long-term sustainability, not just dividing assets evenly.
How can a CDFA® professional help with financial planning for divorcees?
An advisor with the Certified Divorce Financial Analyst® designation specializes in the financial complexities of divorce and can play a key role in financial planning for divorcees by analyzing asset division options, running long-term financial forecasts, and assessing tax consequences. At Thrive Wealth Management, LLC, this approach aims to help clients make informed decisions that support financial stability well beyond the divorce settlement.
What do we recommend divorcees consider beyond dividing assets during financial planning?
Effective financial planning for divorcees often goes beyond asset division and can include identifying hidden income or assets, evaluating future income needs, understanding tax exposure, and coordinating with legal professionals. Thrive works alongside divorce attorneys with the goal of helping coordinate financial decisions, maintain transparency, and align with each client’s long-term goals.
About Steve
Steve Erfle, CFP®, CDFA™, is a Co-Founder and Managing Partner at Thrive Wealth Management, LLC, a boutique financial firm located in Blue Bell, Pennsylvania, dedicated to offering REAL financial planning for a fair fee. With over 15 years of experience helping clients move from confusion to confidence in their financial lives, Steve specializes in comprehensive financial planning, including investment management, retirement, tax and estate planning, charitable giving, risk management, and divorce consulting.
Prior to founding Thrive Wealth Management in 2013, Steve worked at SEI Investments, Legacy Advisors, and United Capital Private Wealth Counseling, gaining experience with high-net-worth clients on wealth management, family continuity, and estate distribution. Steve obtained a BA in Economics from Ursinus College, an MBA in Finance from Saint Joseph’s University, and holds the CERTIFIED FINANCIAL PLANNER® and Certified Divorce Financial Analyst™ designations. Outside of work, he enjoys spending time with his wife, four children, and two dogs, as well as coaching youth sports and playing basketball and golf. To learn more about Steve, connect with him on LinkedIn.
Disclosure:
This material is provided for informational and educational purposes only, should not be viewed as an exhaustive discussion of the topics presented, and should not be construed as individualized advice for any reader’s personal circumstances. For guidance on how these matters may impact your financial plan or investment portfolio, please contact your Thrive Wealth Management, LLC representative. While the information presented is believed to be factual and up to date, Thrive Wealth Management, LLC does not guarantee its accuracy and, due to various factors, including but not limited to changing laws and regulations, this information is subject to change. All expressions of opinion reflect the judgment of the authors as of the date of publication. Thrive Wealth Management, LLC is not a law firm or an accounting firm, and no content contained herein should be construed as legal or accounting advice. Please consult with the qualified professional(s) of your choosing for legal and accounting advice.
Please visit https://thrivewealth.com/disclosure for additional information regarding the professional designations and credentials discussed. Professional designations and credentials do not guarantee success or any particular investment or financial outcome.
Past performance does not guarantee future results. All investing comes with risk, including risk of loss.
