By Steve Erfle, CFP®, CDFA™, MBA
Divorce (and the period immediately after) can be extremely difficult emotionally, financially, and logistically. If you’re a high-net-worth divorcee, the financial decisions you make in the year immediately afterward can have a lasting impact on the trajectory of your life.
Here’s a look at five important financial steps to consider in the year following your divorce.
1. Organize Your Finances
For high-net-worth divorcees, the first important financial move is organization. Gather important documents and keep them in a safe place.
- Your divorce settlement agreement
- Tax returns
- Insurance documents
- Your will
- Any applicable powers of attorney
- Deeds to any properties you own
- Investment statements
Your financial advisor may recommend software for storing and organizing these documents.
Another key part of organization is building a budget for your new life. Look closely at your monthly income and expenses to get an idea of what you can reasonably afford.
Finally, an emergency fund can be essential for high-net-worth divorcees (and everyone). You might choose to keep this fund in cash, a savings account, or a money market account. The most important detail is that the fund is set up so you can access it quickly.
2. Build a New Financial Plan
Building a budget is a great first step, but as a high-net-worth divorcee, you may want a detailed plan for the future too. Your financial advisor can sit down with you to help you build and test a plan. Based on your plan, you can set an annual savings goal.
3. Implement Investments
Do your current investment allocations match your new financial plan? If not, it may be time to make some changes. To keep things as easy as possible, it’s often wise for high-net-worth divorcees to consolidate accounts (where possible) first.
Unless you manage your investment accounts yourself, your financial advisor can manage reallocation of assets and update your investment strategy. You can use your online client portal or other software to track the performance of your investments over time.
4. Prepare for Tax Season
For many high-net-worth divorcees, some of the most noticeable financial changes happen during tax season. If you filed jointly while you were married, filing singly can be an adjustment.
If you haven’t already, you should consider putting your financial advisor and your accountant in touch so they can develop a tax strategy that suits your needs. Think about asking them to run a tax forecast to anticipate future issues and help you mitigate them as soon as possible.
5. Update Your Estate Plan
High-net-worth divorcees generally need to make major changes to their estate plans. These often include revising or rewriting wills, updating trusts, and revoking old powers of attorney. Once you select new representatives you trust, you can create new powers of attorney that better suit your needs.
During this process, don’t forget to review and update beneficiary designations on your retirement account, life insurance policy, and any other relevant accounts. Like many other high-net-worth divorcees, you might have your former spouse listed.
In most cases, beneficiary designations listed on the accounts themselves take precedence over those listed in your will. This means that if you don’t promptly make updates, there’s a chance your ex-spouse could receive your assets after your death.
Helping High-Net-Worth Divorcees Build New Lives
Divorce can create financial upheaval for anyone. However, for high-net-worth divorcees with complex financial situations, dealing with the financial fallout can be far more involved.
Fortunately, you don’t have to navigate that fallout alone. Thrive Wealth Management, LLC, is devoted to helping divorcees like you move through this difficult life change in pursuit of financial wellness. Contact us today. To set up an appointment, call (215) 376-5530 or email steve@thrivewealth.com.
About Steve
Steve Erfle, CFP®, CDFA™, is a 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:
The material set forth herein is provided for informational and educational purposes only. It should not be construed as tailored or individualized advice, and it is not a full analysis of the topics presented. Readers should discuss the topics addressed herein with the qualified professional(s) of the reader’s choosing.
Thrive Wealth Management, LLC (“Thrive”) is an investment adviser registered with the United States Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Thrive is not a law firm or accounting firm and the content herein should not be construed as legal or accounting advice.
Not all services will be necessary or appropriate for all clients. The potential value and benefit of Thrive’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions.
Past performance does not guarantee future results. All financial planning and investment strategies have the potential for profit or loss, and different financial planning strategies, investments, and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific financial plan, investment, or investment strategy, including those recommended by Thrive, will be profitable or equal any historical performance level.
For more information on the CERTIFIED FINANCIAL PLANNER® and Certified Divorce Financial Analyst™ designations, please visit https://thrivewealth.com/disclosures.
