Divorce. For many people it’s a time of deep uncertainty. And while it’s crucial to have a network of loved ones to support you, it’s also key to have the best possible team advising you legally and financially.
“You need a team that can help you understand and prioritize your goals, as well as prepare a budget, investment plan and whatever else is necessary for your new, separate financial life,” says Maria Neary, CFA and a senior wealth advisor at Northern Trust. Neary often helps assemble and coordinate the right team of advisors, then ensures that everyone acts in a coordinated and seamless manner. “Serving as the point person to keep all team members on the same page is critical for clients, not just financially but emotionally,” says Neary.
While different situations may require different experts, Neary suggests a matrimonial attorney (to work out the divorce settlement); a new accountant for at least one divorcing spouse (to sort out the tax implications of the agreement); a trust and estates attorney (to update the will and trusts, for starters); and a divorce coach/parenting coordinator (to improve communication between the divorcing spouses). Below, we discuss how the team works together to help you create a winning divorce strategy.
The Wealth Advisor
“When I work with a divorcing client, helping him or her manage through the transition is one of the most satisfying parts of the job,” says Neary.
That process starts with education. “We help clients understand their goals, what changes to expect, and, of course, make sure they are prepared for the financial implications of the settlement,” says Neary. That could mean starting with a budget and investment plan that makes sense for their new situation, for starters. To do that, Neary works with the matrimonial attorney and accountant to evaluate the proposed settlement and crunch numbers; reviews documents with the trust and estates attorney to be sure they reflect a client’s wishes; and provides emotional support along the way.
“You can really alleviate a client’s stress by telling them what not to focus on, so they don’t feel overwhelmed. We help to identify which issues we can deal with later,” says Neary. It is also important to present information to the client in a format that makes the most sense to them, which will be different for everyone. Ultimately, says Neary, the wealth advisor is the repository of all the complex financial information in a high-net-worth individual’s life. “You will have a relationship with all the team members, but as the wealth advisor, I’m in the loop for everything, doing whatever is needed and reaching out to everyone on the team.” That helps to give clients peace of mind, says Neary.
The Matrimonial Attorney
A divorce that is settled out of court is less stressful — and less expensive. That is why in certain situations Neary recommends consulting with a matrimonial attorney who also is trained in collaborative law, to help clients reach a settlement that avoids litigation yet works for everyone. “When you’re in a meeting with collaborative attorneys, sometimes it’s tough to tell who is representing whom — because everyone is working toward common goals,” says Jacqueline Newman, a managing partner at Berkman Bottger Newman & Schein.
Collaborative law also keeps things confidential. “That doesn’t happen once you’re in a courtroom,” Newman says.
Whatever type of matrimonial attorney you choose, that person should take a collaborative, interdisciplinary approach, working with the wealth advisor and the rest of the team. For instance, the attorney can also bring in a “financial neutral” — such as a tax accountant who can attest to the accuracy of all the numbers in front of both spouses. “It reduces anxiety to have someone neutral in the room to confirm that the numbers are accurate,” says Newman, who emphasizes that both partners need to understand the various financial scenarios before making difficult choices.
“You need someone who can help you prioritize your goals, as well as prepare a budget, investment plan and whatever else you need for your new, separate financial life.”
Both Neary and Newman also stress the importance, especially to a non-financially savvy spouse, of having bank accounts and credit cards in their own names, to be sure they will have access to cash.
“Divorce is ultimately a financial transaction,” Newman says. That means being strategic about decisions rather than letting emotions take over. “If your husband has spent two years working to build up a new company and is about to open the doors, it’s probably not the best time to get divorced,” Newman says. “You have to be smart about timing.”
Certified Public Accountant (CPA)
For divorcing clients, it makes sense for at least one spouse to get a new accountant — and not just any accountant. “For high-net-worth individuals, you want a specialist who understands the tax implications of splitting a business, or knows how to deal with restrictive stock plans,” Neary says. An accountant can also guide you during the confusing first year when spousal finances are still merged, and meet with your wealth advisor to get a sense of whether capital gains from your portfolio could be an issue.
Many accountants are also being tasked with paying bills for divorcing couples. “Bill paying can be a hot-button issue,” says Jennifer Prosperino, a CPA and principal with Schulman Lobel. “Outsourcing that chore can minimize conflicts, plus it has the benefit of keeping records clear.”
Another crucial task for tax accountants: making clients aware of how the latest changes in tax law will affect them. One example: “Alimony is no longer considered a tax deduction for the person paying it, which can make it tough to negotiate for more money,” Prosperino says. A good tax accountant will come up with alternatives, she says, like becoming a beneficiary of a retirement plan. “That’s why you really need teamwork between the wealth advisor, the accountant and the matrimonial attorney,” Prosperino adds. “You don’t want decisions to happen in a silo.”
The Trust and Estates Attorney
“Estate planning can be very complex, beyond wills and trusts,” Neary says. Besides working with the wealth advisor to deal with assets that were brought into the marriage, a trust and estates lawyer can also help untangle how certain assets were handled during the marriage (e.g., were trusts set up for the children? was there co-mingling of an inheritance?).
“One major mistake clients make is assuming that trusts a spouse received prior to the marriage are separate,” Neary says. If you received an inheritance, then used the money to purchase a home with your partner, for example, a percentage of that inheritance could go to your ex-spouse in a divorce, depending on state laws.
A trust and estates attorney can help manage those issues, along with the crucial task of reconfiguring the estate plan so that it is in line with the client’s wishes as well as the divorce agreement, and ensures that the ex-spouse does not inadvertently inherit assets. That means choosing new beneficiaries on company 401(k) accounts; clarifying a living will; reassigning powers of attorney; changing HIPAA authorizations, health care proxies and more. “These are important documents,” says Ani Hovanessian, a trust and estates lawyer and a partner at Venable LLP. “You need to think about who you want to give these responsibilities to.”
And because so many other decisions you’re making can also influence your estate, this team player is thinking ahead to factor in everything. “We are dotting all the i’s and crossing the t’s so clients don’t have to,” Hovanessian says.
The Divorce Coach/Parenting Coordinator
A divorce coach/parenting coordinator can make the separation process more positive — and prevent children from ending up in the middle.
“I can help someone through the hurt so they can stay in the present, and address whatever issues come up,” says Barbara Rothberg, DSW, LCSW Often, mental health professionals will sit in on meetings with clients, wealth advisors and attorneys. “When tempers get high, a mental health professional can help keep the peace so a meeting moves forward. That saves you money,” Rothberg says.
A parenting coordinator also works with the matrimonial attorney to hammer out the custody agreement, and can even help clients decode parts of the agreement that might seem ambiguous down the line, like summer camp or school choices.
Ultimately, Rothberg says, the clients who end up happiest are those who can deal with change flexibly — both during the divorce and after.
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