Nobody gets married with the intention of ending the marriage. However, the phrase “until death do us part” is not lived up to by nearly half of all married couples in Texas and other states across the nation, according to many estimates. Divorce is a reality that many couples have to sort through, and for wealthy couples, a high asset divorce can be challenging to navigate. It is important that divorcing couples understand what decisions need to be made and how these decisions could interfere with their finances.
How can divorce impact your financial planning? Whether you are young or old, divorce has the tendency of touching everything that you own. However, for those divorcing later in life, this likely means that even more assets need to be sorted through and addressed.
The divorcing process requires the division of wealth, which in the end likely makes each spouse poorer. When a couple is used to sharing everything in their marital life, it can seem like they have a lot less once the divorce is finalized. Divorce is one of the largest transactions in a person’s life, making it imperative that both spouses gain an accurate perspective of their wealth and how to protect their rights. This is more than just calculating the value of assets, but also protecting the future of these assets.
Financial experts can give spouses a better perspective on their wealth. Additionally, these experts could help a spouse treat a marriage much like a business. Like businesses take the time to plan and prepare for possible future problems, financial planning steps could be taken to protect certain assets during dissolution. Whether that means drafting a prenuptial agreement, postnuptial agreement, or developing a trust, it is important to protect separate assets, such as a family business, inheritances, and certain retirement accounts.
High-asset divorce or not, there are many steps required to get through the divorce process. This often requires sorting through imperative financial decisions.
Source: Chicagotribune.com, “How to avoid financial disaster during divorce,” Martha M. Hamilton, Feb. 13, 2017