Written By: Syble Solomon
Title: Money and Divorce: The essential roadmap to mastering financial decisions
Author: Lili A. Vasileff, CFP, MAFF, CDFA; President of the National Association of Divorce Financial Planners.
Publisher: American Bar Association (ABA), 2017
Contact: Lili@Divorcematters.com / 203-622-4911
As everyone knows who has experienced divorce personally, worked with a divorcing person in any capacity, or lived through someone else’s divorce, divorce is complicated and each situation is unique. This extremely thorough, thoughtful, easy-to-read book recognizes the emotional, financial, legal, and practical components that every divorcing person needs to consider. It helps prepare the reader from the first thought of divorce through the myriad of nitty-gritty in-between steps to finalizing the divorce and then provides after-divorce recommendations.
Although the book is written for a person going through a divorce, it is an incredibly valuable read for every financial professional. Let’s dive in!*
Chapter 1: How This Book Can Help: Your Financial Guide To Divorce
Provides an overview of the book and hits on topics like what you do not know can hurt you; feeling overwhelmed, mistakes to avoid, and if I had only known that…
Chapter 2: The First Steps: What You Should Consider When Contemplating Divorce
The signs to detect that you are heading for divorce and what should be your top considerations. An overview of the different phases of divorce, various legal options, what you need to know about contested and uncontested divorce, fault, how to pace yourself and how to manage costs.
Chapter 3: You Have Decided to Divorce, Now What? An Outline of the Divorce Process
Read a well-laid-out overview of the legal sequence of events, important dates to know, how to keep your divorce private, how to protect yourself from financial chaos, steps you can take to prepare for a divorce, inherent pitfalls of divorce, and common financial mistakes to avoid.
Chapter 4: Preparing for Your Financial Divorce
An overview of the primary financial issues in divorce, including defining property ownership, defining equitable distribution versus community property, dividing marital and nonmarital money, addressing a family-owned business, and commonly asked questions.
Chapter 5: The Financial Phases of Divorce
The financial sequence of events in a divorce, including what information you need to gather, how to prepare a Net Worth Statement, how to fit all the pieces of the financial puzzle together, and how a divorce financial planner can help.
Chapter 6: What If I Don’t Know…? How Do I…? The Unknowns That Keep You Awake At Night.
Find responses to key questions that come up such as: when you don’t have enough or accurate financial information, when you should be suspicious of the other party, and how to find hidden assets. It also walks you through what to do if your spouse declares bankruptcy during or after divorce, prenuptial and postnuptial agreements, and each person’s obligations after the divorce.
Chapter 7: Splitting Up Your Property: The Balancing Act
Guidance for how to value and divide up property and define financial terms you need to know, such as cost basis, liquidity, real after-tax value, and types of assets. It will also help you determine what an asset will cost to keep, what assets you will be forced to trade or sell, and how to ensure that all transfers to you are accurate and timely.
Chapter 8: Financial Investments: What Are They?
An overview of the different kinds of financial investments and practical tips for dividing investments, including cash, publicly traded securities, real property, life insurance, annuities, non-publicly traded securities, precious objects, personal belongings, and a family-owned or closely-held business.
Chapter 9: Retirement Assets: What Makes Them Special?
Learn about the various types of retirement plans and accounts, pre-tax and after-tax contributions to tax-deferred accounts, and dividing retirement assets. It also explains the Qualified Domestic Relations Order (QDRC) and risks with future assets.
Chapter 10: What is a Contingent Interest in the Marital Estate?
Learn what a contingent interest is, how to identify deferred compensation benefits, how to divide benefits, and strategies to protect your fair share, as well as taxes, trusts, and income interest in divorce.
Chapter 11: Real Property and Your House: Sell It, Keep It, or Transfer It?
Financial options to consider for real property, including factors in making a decision, making sense of your decision, dealing with mortgages, ownership after divorce, spousal support paid as a mortgage payment, tax benefits of owning, taxes on the sale of your house, reduced exclusion of a second home, and commonly asked questions.
Chapter 12: Child Support
Focus on child-related expenses, child support guidelines, deviation from guidelines, modifying support, custody types, tax implications, and the tiebreaker for tax filing status.
Chapter 13: Spousal Support, Also Known as Alimony
An overview of different types of spousal support, statutory factors of entitlement, calculation of spousal support, duration factors, taxes, the IRS alimony recapture rule, and the IRS child contingency rule. It covers in-depth explanations of forms of payments, waivers, and modifying or terminating support, as well as what happens if your spouse dies during or after divorce, and late-life divorce and its unique considerations.
Chapter 14: Debt, Credit, and Credit Worthiness: How to Protect Your Credit
This covers all the normal credit information including credit scores and reports but also looks at responsibility for debts in marriage, protecting your credit, what you need to know about equal opportunity rights under the law, and practical tips about divorce and credit.
Chapter 15: Divorce and Children with Special Needs
“Special Needs” is defined as well as “best interests” of the child, parenting plans and special needs lists, child support and added expenses, public benefits planning before and after the age of 18, special education, transition planning, spousal support implications, and estate planning.
Chapter 16: College: The Effects of Divorce on College Financing and Financial Aid
An overview of the financial aid process for divorced parents, how to maximize your financial aid, how income and assets of parents and children are counted differently, key things you need to know, and practical tips for Free Application for Federal Student Aid (FAFSA) applications.
Chapter 17: Taxes and Divorce
A look at the tax impact of divorce, tax facts in divorce, how the timing of your divorce impacts taxes, who gets tax credits and can claim deductions, whether your ex-spouse can place you at risk with the IRS, and what happens to your taxes after divorce.
Chapter 18: Getting to “Yes”: Negotiating a Settlement
Here are the top reasons to settle, strategies to reach a settlement, how to determine if your spouse is sabotaging any agreement, why to avoid trial, why you must obey orders and practical tips to thrive post-divorce in your new life.
Chapter 19: The Light at the End of the Tunnel: Your Financial Situation after Divorce
How to rebuild your financial life, including how to set goals, create a budget, build an emergency fund, update key financial areas of your life, keep up with challenges in taxes, take care of your debts, and plan for retirement.
In conclusion, Vasileff’s book provides the questions and answers you and your clients need to navigate this difficult life event by being prepared at each step along the way. The knowledge it provides and the positive, productive attitude it encourages are key for the best outcomes. Since the divorce rate in the US is approximately 50%, everyone working with money-related issues would do well to have this information.
Syble Solomon speaks on the psychology of money and is the creator of Money Habitudes®, the leading money personality profile. She was awarded the AFCPE Mary Ellen Edmondson Educator of the Year Award and has served on the AFCPE Board of Directors. firstname.lastname@example.org, moneyhabitudes.com
*This book is also excellent if you are working with anyone in an abusive situation who is considering leaving their abuser. While the book does not talk about additional information and support that could be necessary for that person’s safety, it does cover what the victim needs to know, information to gather and a mindset and knowledge to help be better prepared for a better outcome. If you’re working with someone with few assets and no investments, some chapters will not apply, but the other information is appropriate and invaluable for your client being prepared to work with a lawyer or mediator.