The month of January has come to be known as ‘divorce month.’ The start of the New Year brings with it a roughly one-third increase in divorce filings, perhaps because families opt to stay united throughout the holiday season.
There are few life transitions more difficult than navigating a divorce. According to Nicole Mayer, AIF, CDFA of RPG Life Transition Specialists, a holistic wealth management firm in Chicago, both parties must arm themselves with knowledge and understanding to avoid unnecessary complications, especially as they relate to their finances.
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“The number of people who jump into a divorce without realizing the kind of financial implications it has is disheartening,” says Mayer. “It’s like having a baby without ever reading a parenting book. Our goal is to make sure folks know what to expect, and are prepared for the unexpected.”
Below are RPG Life Transition Specialists’ top five tips for navigating divorce month as unscathed as possible.
- Anticipate Up Front Costs: A divorce typically costs no less than $20,000, and understanding that up front will make for a smoother transition. “When you factor in lawyers, tax advisors, time off work, the cost of a divorce is greater than it may appear at the outset,” warns Mayer. “Do your research so there are fewer surprises. Also, consider mediation as part of your divorce, which significantly reduce the costs.”
- Understand Your Immediate Needs. Over the short term, your number one goal should be survival. “If you’re concerned about making ends meet during and after the divorce, that should inform your negotiation strategy,” says Mayer. “Stocks and bonds, which can be easily liquidated, should be a priority above retirement accounts or other long-term investments.”
- Review Past Tax Returns. Sit down with your spouse and review the past five years of jointly-filed tax returns to determine income and future tax advantages. “Oftentimes, there are tax benefits accrued during a marriage that come to fruition years in the future,” says Kadish. “Those are negotiable assets to consider.”
- Consider Beneficiary Information. Take some time to review and adjust the beneficiaries on your retirement accounts and insurance policies. “Amidst all the paperwork and meetings, this is often overlooked,” says Mayer. “If you have to name a minor child as a beneficiary, you’ll have to determine a guardian who is not your soon-to-be-ex.”
- Check Your Debt. Any debt realized jointly during the course of a marriage stays with a married couple indefinitely. “Regardless of what settlement terms you secure, if one spouse does not pay a debt you both incurred as agreed, the other is responsible,” cautions Mayer.
Divorce is understandably difficult, but knowing what to expect and having a clear plan for managing finances will help make it as smooth of a life transition as possible.
For more information on divorce tips or to schedule an interview or segment with Nicole Mayer, AIF, CDFA of RPG Life Transition Specialists, please contact me directly.
About RPG-Life Transition Specialists (RPG) – RPG is a financial planning firm that exists to help people connect their wealth to purpose and live a more enriched life as we educate them to make future decisions with confidence. We believe that the financial services model has been broken and have strived to do things differently. We do this by putting education first, spending our time in helping people identify what is truly important in life to them and helping them connect their wealth to their purpose. With a 90% client retention rate over the course of 19 years, the experienced team of financial professionals take time to counsel each prospect and deliver a plan designed to meet each individual’s specific needs. Partners, Joshua Kadish, AIF, RFC& Nicole Mayer, AIF, CDFA reached #1 on Amazon in the wealth management category for their book, Navigating Life’s Transitions: Connecting Your Means To Your Meaning. They have been featured in esteemed publications like the Wall Street Journal, Money, Consumer Reports, Crain’s ChicagoBusiness and have been recognized by Chicago Magazine as Five Star Wealth Managers in 2012, 2013 & 2014. Kadish is also the former co-host of “America’s Wealth Management Radio Show” with Dean Barber on 890 AM WLS. RPG-Life Transition Specialists is located at 2610 Lake Cook Road, Suite 250, in Riverwoods, Illinois. They can be reached at (800) 596-0253. Find them online at www.rpgplan.com. Securities and advisory services offered through National Planning Corp. (NPC), Member FINRA/SIPC. A Registered Investment Adviser. RPG and NPC are separate and unrelated companies.