In this Podcast we welcome Michael Murray of Peabody Wealth Advisors. Mr. Murray is a financial planner and is an Accredited Investment Fiduciary®, an Investment Advisor Representative, and Registered Representative of SII Investments, Inc.® In this Episode we discuss how divorce can be one of the most expensive decisions of a person’s life, yet many don’t consider serious financial concerns facing each side prior to making the decision to seek a divorce. The lack of planning can have serious consequences and can have a negative effect on a person’s future, especially their retirement planning. Those who have been in longer marriages should be particularly concerned about the financial ramifications of a divorce.
Some of the financial considerations when contemplating a divorce are:
- Assume a 50/50 split of the marital assets.
- Assume an increase in your living expenses. Expenses that were previously shared are now the responsibility of each individual. Make sure you make aggressive estimates of how much your expenses will be post-divorce, and include the effect of inflation into those calculations.
- Assets and income that may have been “separate” prior to marriage can sometimes transmute and become a marital asset subject to division.
- Marital assets acquired during the course of a marriage, including 401(k)’s, bank accounts, IRA’s, property (Residential/Commercial/Vacation), collectibles, jewelry, and vehicles, to name a few, are subject to marital division.
- Just as assets are shared, so are most debts. Even if your divorce settlement says that your ex-spouse is responsible to pay shared debts, creditors can still come after you if your ex fails to make payments.
- Remember that even though one spouse may be required to make payments such as alimony, child support or debt payments – if that spouse loses their job, becomes disabled, or dies prematurely, the other spouse will be left to fend for themselves unless the proper financial plan has been put into place.
Divorce can also have an unintended negative effect on your health and well-being. The stress of a contentious divorce can lead to health-related issues that can have a negative financial effect due to medical costs, time out of work, and lost productivity.
The bottom line is that in the absence of issues of personal safety, abuse, or other unbearable situations at home, both parties should think long and hard about a decision that can affect a person’s long-term financial well-being long after a divorce has taken place.
If you have any specific questions regarding your financial outlook whether or not you are contemplating divorce, please do not hesitate to contact Michael Murray at Peabody Wealth Advisors, (978) 304-1212.
Links to some helpful resources mentioned in the Podcast include:
Peabody Wealth Advisors (http://www.peabodywealthadvisors.com)
Credit reports (https://www.annualcreditreport.com)
Social Security Retirement Estimator(http://www.ssa.gov/retire/estimator.html)
Please note that securities and advisory services offered through SII Investments, Inc. ® (SII), is a member of FINRA/SIPC, and is a Registered Investment Advisor. SII, Peabody Wealth Advisors, and Reade Law Firm PC are separate and unrelated companies. SII does not provide tax or legal advice.