DIVORCE: Managing details in the midst of devastation can make a big difference long term
About this blog:
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Sarah Ruef-Lindquist, JD, CTFA
Sarah believes sound, thoughtful planning is a gift we give ourselves, our families and our community.
She is a lawyer and seasoned non-profit executive who has worked with dozens of organizations, individuals and families as a philanthropic advisor and senior trust officer. She holds the Certified Trust and Fiduciary Advisor certification and FINRA Series 7 and 66 registrations through Commonwealth Financial Network. Sarah and her husband live in Camden. The Financial Advisors of Allen and Insurance Financial are Registered Representatives and Investment Adviser Representatives with/and offer securities and advisory services through Commonwealth Financial Network (R), Member FINRA/SIPC, a Registered Investment Adviser. Allen Insurance and Financial, 31 Chestnut Street, Camden, ME 04843. 207-236-8376.
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Divorce rates exceed 50% for first marriages in many parts of the US, and 67% for second marriages. Yes, it happens often, but it is rarely easy, no matter how amicable.
The emotional turmoil of the process can be overwhelming. Many people liken it to the grief of losing a parent or child. At least in theory, it is the death of a marriage. It is also a time of financial turmoil. Debts and assets can become weaponized to gain advantage. Decisions that are incorporated into a court decree can have lasting – if not permanent – effects. Having legal representation to advance a client’s interests is important, as is having a financial advisor who can help them be informed about decisions involving debt allocation, property division, including assets like retirement plans and social security options. These choices can have lasting, long-term value for a person going through divorce.
For instance, a party divorcing may want to not only change their will, but change their beneficiary designations on things like bank accounts, life insurance contracts or other accounts. In Maine, a new Probate Code effective September 1, 2019 has changed the way beneficiary designations naming a spouse are treated if a divorce occurs after the designation was created, but before the death of now former spouse who did not change that designation. Maine law now treats those designations as revoked by virtue of the divorce. In the past, designations of spouses who became ex-spouses were still honored. It is still prudent to make these changes to reflect the intent of the account holder. A financial advisor can facilitate the necessary paperwork.
Divorced spouses also have choices about future social security elections. If a marriage lasted 10 years, and the parties have been divorced for 2, the unmarried former spouse can claim a benefit that is 50% of their former spouse’s benefit if it is higher than their own benefit. This does not impact the former spouse’s benefit (even if they have remarried), and they won’t even necessarily know that it has been elected by the former spouse claiming it. A financial advisor can assist with navigating decisions like this.
These are just a few of the ways financial advisors can help with the financial decisions that need to be made in the course of a divorce and following. Consider adding a financial advisor to your “team” if you are facing divorce to help navigating the many decisions to be made for your immediate needs and the future. A financial advisor can work with your attorney to help you make the best decisions for your particular situation.
