Top 10 Considerations When Facing Divorce

As you transition from one chapter of your life to the next, what follows is our pick of the top 10 considerations you may want to address. For seamless and integrated advice, your financial advisory team should work collaboratively with your attorney and other advisors, and have the breadth and depth to provide a full spectrum of services.

You likely will need to open accounts in your individual name and develop a list of your revised assets and liabilities.

Custom credit may provide you with a reliable source of funding for unforeseen expenses, real estate purchases, and business investments. You’ll need an experienced professional to help evaluate your options and provide lending based on your unique assets—including specialty or illiquid holdings. Solutions to consider include:

• Marketable securities-backed lines of credit, including restricted and concentrated stock, which may be an especially valuable option to help preserve an underlying portfolio instead of selling at a time of crisis
• Bridge financing to help with a significant purchase
• Specialized asset-backed loans secured by partnership interests, fine art, yachts, and aircraft
• Residential and investment real estate financing, including lines of credit

An experienced financial advisory team should offer a comprehensive financial plan analyzing the changes in your cash flows from assets received, alimony, changes in expenses, and other cash flows expected after the dissolution of marriage. By providing a comprehensive overview of the following factors, an advisor can help you balance your projected expenses while maintaining the lifestyle you seek:

• Cash flow planning for income and expenses
• Alimony/child support
• Asset sustainability study and portfolio risk analysis
• Tax situation review and appropriate planning

An experienced financial advisory team can help you review all your important estate planning documents and be confident you are providing for your chosen heirs, updating your beneficiary designations, and naming new designees for your health care and power of attorney documents. With frequent long delays in finalizing divorce, the need to have documents updated to reflect your intent is very important. Some documents can be changed while divorce is pending, while others must wait until the divorce decree is issued. Documents to consider include:

• Will and trusts (usually can be changed while divorce is pending)
• Power of attorney and health care directive (usually can be changed while divorce is pending)
• Retirement accounts and plans (usually cannot be changed while divorce is pending)
• Jointly named real estate and financial accounts (usually cannot be changed while divorce is pending)
• Authorizations to access digital accounts, including financial accounts, email accounts, social media accounts, etc. (usually can be changed while divorce is pending)

When trusts are utilized to protect settlement payments, it is important to select a trustee who will be your fiduciary: A trustee whose first and foremost responsibility is to protect your best interests and those of your family.

The preparation of a business valuation is a lengthy and expensive process. Valuation reports can exceed one hundred pages in length and can be very difficult for even seasoned professionals to understand. For any business that has been appraised as part of the settlement process, you should feel confident your advisor can review the appraiser’s valuation report and provide insights that may answer questions such as:

• Is the appraiser a qualified professional with experience and valuation credentials?
• Is the appraiser’s financial analysis of the company thorough and explained?
• Are the methods used appropriate and the reasons for their selection discussed?
• Is the value conclusion reasonable, based on the factors presented in the report?

If you’re receiving a settlement you want to be certain that your short- and long-term needs are met through the creation of a customized investment portfolio. It will be important to have a dedicated financial advisory team that can tailor a portfolio based on your specific parameters, including liquidity and spending needs, time horizon, risk tolerance, cost sensitivity, tax efficiency and other factors.

It's important to be sure your spouse’s settlement obligations are secured with appropriate life insurance, or potentially probe its value as a marital asset. Insurance review is very important to be certain you have the appropriate coverage, you or your ex-spouse have named the correct beneficiaries, and that the premiums are being paid. Health, life, disability, property & casualty, and long-term care insurance should all be reviewed to identify what actions might be recommended, including revising policy ownership and beneficiary designations, and understanding who has responsibility for premium payments.

Your advisory team can establish projections and analytics helpful to the settlement process by delineating the future costs of college based on the ages of the children and the potential colleges under consideration. This data can be coupled with merit-based aid scholarship strategies and other financial aid analytics. Often, trusts can be designed and created specifically (or in concert with other goals) to fund education.

Your advisor should review any existing private foundations and charitable trusts to be certain they are still in line with your goals and wishes. Your advisor can also review potential charitable techniques that could be utilized to support philanthropy and mitigate taxes in the settlement process.

To learn more, please visit our dedicated divorce planning resources.

This article is for educational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. It is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought. There is no assurance the any investment, financial or estate planning strategy will be successful.

Investing involves risks and you may incur a profit or a loss. There is no assurance that any investment strategy will be successful. Diversification cannot ensure a profit or guarantee against a loss.

Wilmington Trust is not authorized to and does not provide legal, accounting, or tax advice. Our advice and recommendations provided to you are illustrative only and subject to the opinions and and advice of your own attorney, tax advisor, or other professional advisor.

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