Emotional Fog of Divorce

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1 Emotional Fog of Divorce Credit Image: Photo by craigcloutier via Flickr An Educational Resource Prepared by Rebekah J. Fero, CFP Women s Financial Life Coach

2 Finding Your Way through the Emotional Fog of Divorce Whether you are taking the first step or you find yourself reluctantly having to go through a divorce, the journey through the process is one of gut wrenching emotions anger, shame, betrayal, judgment, loss of self-identity, fear and uncertainty. You are shrouded in a cloud of many doubts, questions and concerns. Often the well-meaning advice of family and friends begin coming at you from all directions and it becomes overwhelming. But take heart. Take a moment. Grab a cup of coffee or tea and BREATHE. There are steps you can take to walk through this fog to make the life-impacting decisions that will protect you and your family by proceeding with care and seeking expert advice. Here s are some strategies to help you cope in this process from 1. Call on your network of family, friends, therapist, clergy or divorce groups. 2. Empower your life by taking control of it; get organized and make informed decisions. 3. Learn about the divorce process and take time to find the right lawyer. 4. Ask questions and find the right professionals to help you answer those questions. 5. Give yourself the opportunity to explore the options and consciously make choices about the life you want to lead after the divorce.

3 Contact a Family Law Attorney to determine what important steps your personal situation requires that can be addressed immediately. Today, the issue of divorce is so much more complicated than ever when it comes to legal, tax and financial implications which can impact you ten, twenty or thirty years beyond divorce. In fact, many attorneys now recognize that having a financial planner review the financial settlement or provide an expert opinion, helps all parties feel assured the utmost was done to secure the best financial outcome for you for years to come. Working with your attorney, a financial planner with expertise in divorce can assist in the following ways as described by the Institute of Financial Analysts: 1 Strategist/Litigation Support Brings an innovative and creative approach to settling cases. Financial Expert Review and give input on investment data, retirement plans, benefit programs, business records, tax returns, and all other financial data. Data Collector/Budget Preparer Collect data to prepare the financial affidavit and pre and post-divorce budgets. Client Expectations Manager Provide from the financial planner s perspective, the reality of what is going to happen so you can have realistic expectations Evidence Presenter Present evidence to show the financial impact of different settlement options or information related to financial, tax, investment or retirement plan issues. 1 Institute for Financial Analysts:

4 Work with a financial planner. You may say, wow, this sounds expensive, but the consequences of not having professional advice could cost you literally thousands of dollars in your post-divorce life. Studies show that women more than men tend to lack knowledge of financial topics and may be more vulnerable, especially when they are highly emotional. By preparing for your future in a structured way, you will be more empowered and confident the settlement is the most favorable for your future. Also, you can have additional confidence in working through your financial future with a Certified Financial Planner with additional expertise in divorce issues. What are some ways you may benefit by working with your financial planner? 2 1) Financial analysis conducted early in the divorce process can save time. The average length of the U.S. divorce process is one year. In the beginning stages of the process, both parties spend a great deal of time trying to get a clear understanding of the financial aspects and terminology of the separation. A specialized financial planner can explain all financial aspects of the pending decisions and help to empower you to make educated decisions throughout the proceedings. 2) Saving money during the divorce process. You can have a clearer view of your financial future. Only then can you approach a legal settlement that fully addresses your financial needs and capabilities. A legal settlement that floats back and forth between attorneys, without the client having a clear understanding of all financial ramifications, can be detrimental, time consuming and expensive. A financial planner can educate their clients by providing a thorough knowledge and understanding of the often-complicated financial decisions. 3) Avoiding long-term financial pitfalls related to divorce agreements. 2 Institute for Financial Analysts:

5 Working with a client and their attorney, a Certified Divorce Financial Analyst can forecast the long-term effects of the divorce settlement. This includes details of all tax liabilities and benefits. Developing a long-term forecast for their financial situation is far better than a short-term snapshot. Financial decisions must be made that not only take care of immediate family needs, but retirement needs as well. 4) Assisting their clients with developing detailed household budgets to help avoid post-divorce financial struggles. A financial planner can help you think through what the divorce will really cost in the long run and develop a realistic monthly budget during the financial analysis process. Expenses such as life insurance, health insurance and cost of living increases must be taken into consideration when agreeing on a final financial settlement. 5) Reducing the amount of apprehension and misunderstanding about the divorce process. Misinformation and misconceptions about the divorce process can be detrimental. Many have false expectations that they will be able to secure a divorce settlement allowing them to continue with their accustomed style of living. Financial divorce analysis helps to ensure a good, stable economic future and prevent long-term regret with financial decisions made during the divorce process. What kind of settlements should you and your financial planner review? 3 Divorce and Debt There are 4 types of debt and basically, you have five options in allocating your marital debts. It is important to understand the all the implications. Divorce and Estate Planning When divorce is contemplated, the selection of beneficiaries and executors will likely be revised to reflect the absence of your former spouse. Divorce and Property Settlements and Third-Party Transfers Consider all financially based assets (homes, businesses, IRA s, etc.), as well as property of value such as antiques, art or collections and sale of property with intent to divide the proceeds. For example, here is a scenario of tax issues when selling real estate property: 3 Securities and investment advisory services offered through FSC SECURITIES CORPORATION-Member FINRA/SIPC - A Registered Investment Advisor

6 Suppose you and your spouse have a marital home valued at $300, in Florida. In addition, you both purchased rental investment property 20 years ago for $100,000 in the mountains of North Carolina and it is worth $300,000 today. Which would you choose when both are valued the same? By choosing the wrong property in the divorce settlement you could be looking at paying several thousands of dollars to the federal government and to the State of North Carolina because investment property is taxed differently on disposition than your principal residence. In this example the illusion is that both properties are the same in value but in reality they are very different. Attorneys are well versed in law, but not necessarily on financial issues. On the other hand, financial planners and CPA s are experienced at considering taxes and all its implications. This is why having a team of professionals to guide you can save literally thousands of dollars. Educating yourself about the financial options and the ramifications of your decisions can save you money and give you the knowledge that you have made the best decision for your new future. With professionals you trust, the journey through the emotional fog of divorce becomes a little bit clearer. It is a different path you will take after divorce. Take it one step at a time. Ask for support from your family and friends. Seek expert guidance for decisions that will impact you and your children for a lifetime. Breathe. COURAGE DOESN T ALWAYS ROAR. SOMETIMES COURAGE IS THE LITTLE VOICE AT THE END OF THE DAY THAT SAYS I LL TRY AGAIN TOMORROW. About Rebekah Fero MARY ANNE RADMACHER

7 The Woman s Financial Life Coach Certified Financial Planner Over the 26 years of my practice, I have always been drawn to women who have become suddenly single. Whether it is through divorce or widowhood, I believe women need an ally to help them through the confusing, complex and emotional phases of grief, loss, anger and vulnerability. Finances are often a major issue when a woman becomes suddenly single. It is at this time when women are most vulnerable. Women who find themselves suddenly without a companion are left without knowing how they are going to live on their sole income and assets and whether or not the monies will last. Numbers are important when dealing with financial planning, but understanding a client s feelings and beliefs about money is just as important. I have a discovery process I use with my clients to help them uncover their own ideas about money which helps me guide them through their questions, fears, and doubts. My greatest joy and satisfaction is seeing a client understand what they can do to plan for the life they want and need. My desire is to coach a woman through the ups and downs of the process and by doing so develop a deep level of trust with the client. It is so rewarding for me to hear a client say thank you for caring so much. Rebekah J. Fero is a Certified Financial Planner. She received her designation in 1994 from the College for Financial Planning. She holds a Series 7, 24 and 63 securities registrations in addition to life, health and variable annuity licenses with the State of Florida. Rebekah has worked as a compliance officer, financial advisor and tax consultant. Rebekah's areas of specialty are investment, retirement, estate, tax and risk management planning. She is a member of the Financial Planning Association and the Charlotte Estate Planning Council. Copyright 2012 by Rebekah Fero, CFP. All rights reserved