VOL. 126 | NO. 38 | Thursday, February 24, 2011
Rays of Wisdom
Dana and Ray Brandon
Fire the Spouse, Keep The Financial Planner
Ray and Dana Brandon
Ray’s Take: Divorce is never pleasant, yet for some it is a fact of life. As hard as both parties try to forge a happy marriage, sometimes it doesn’t work.
In this position you may think, “I need a good lawyer.” You should also think, “I need a good financial planner.”
Looking at the causes of bankruptcies in Tennessee, divorce ranks right behind unemployment and medical bills.
Attorneys hammer out the legal details of divorce, which may include child custody; division of property; divvying up retirement, pensions and investments; and dividing or selling a business.
A financial planner focuses on the short-term and long-term financial picture. He or she can analyze your current cash flow and lifestyle as well as prepare a statement of your current net worth.
And the planner can project the short-term and long-term implications of a proposed divorce settlement. For example, you may not realize that alimony may be tax deductible and child support is not. A financial planner will know that and the far-reaching financial implications.
Ask your financial planner to review everything before you sign it.
Another pitfall in the divorce process is that emotion often overrules logic. You may be haggling over a sofa, who has the kids on Christmas morning or demands to make your soon-to-be-ex squirm. Meanwhile, critical financial decisions may be made without the scrutiny they deserve.
A financial planner provides objectivity and an eye toward detail. For example, when you consider child expenses, you might tally food, shelter, clothes and school costs. A financial planner can calculate current and future child-related expenses looking at more than 150 factors.
More important, when the divorce is settled, you may never see your lawyer again. Your financial planner, however, will be by your side helping you plan and budget for a post-divorce world.
Because two households cost more than one, families often have to adjust their lifestyles after a divorce. Tough choices can include selling a home or vehicle, changing schools, or training to re-enter the workforce. A financial planner can help you make those decisions with your head rather than your heart.
Dana’s Take: When you’re going through a divorce it may be hard to imagine a time when you might be interested in another long-term relationship.
Odds are it will happen. And, when you start to feel that flutter in your heart and the rising wave of optimism, make sure you protect your financial future and your children’s.
A financial planner can explore those awkward questions about assets and debts, including retirement, college funds and inherited assets. It’s better to have those conversations and agreements before tying the knot.
Before you blend families and finances with your new love, have a heart-to-heart talk with your financial planner.
Ray Brandon is CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a Licensed Clinical Social Worker (LCSW). Contact Ray Brandon at email@example.com.