Taking the Next Steps - Step One
One of the incidents that led me to focus as a CDFA happened in my wealth management practice several years ago. A woman came in to see me, bringing with her a copy of her husband’s 401k, two years after her divorce, asking how she could get the half of the balance she had been granted in the divorce. Her attorney had negotiated the settlement, but the next step, to actually transfer the funds, was not the attorney’s role. The client simply did not know how to do the next thing.
Clients often wake up the morning after, expecting that everything will be different, just because the agreement has been signed. They are usually no more prepared to deal with the hands-on practical issues involved in dissolving their economic partnership the next day than they were when negotiations were still underway. They still need the help and support of their divorce team to move on.
Here are a few of the general issues that clients face, post-divorce. Each case is different, and everyone may not need to deal with every item on the list. Some will need all; all will need some.
I generally recommend that clients continue any counseling from during the process until they feel they've turned the corner. Dealing with these issues may bring up some of the unresolved emotional issues of your divorce. You don’t have to do this alone!
Your attorney may not wish to take this on, and you may be so sick of seeing him/her after the long divorce process that you’re fine with that! Or you may not wish to pay attorney fees to take care of most of this. CDFA's are specially trained to deal with these issues, and can seamlessly step in to finish up what has been brought to a legal conclusion.
WHAT TO REVIEW?
First: Legal Issues. Of course, you need an attorney for much of this part!
- Last Wills & Testaments: Do you need a new Will? Who should be Executor/Executrix? Trustee of any testamentary trusts? Have you done Estate planning with both your CDFA/financial advisor and attorney?
- Children: What does Agreement require in a Will? What about a trust for minor children, naming trustee? Is there a need for a Supplemental Needs Trust? Who should be the Trustee?
- Life Insurance: Is an Irrevocable Life Insurance Trust appropriate? Who would be the Trustee? (There are more issues around life insurance to review with your CDFA, as well)
- Health Care Proxy: Who is named as agent to make medical decisions? Is that still OK or should a new Health Care Proxy be prepared?
- Power of Attorney: Who is named as agent to handle financial affairs? Is that still OK or should a new Power of Attorney be prepared?
- Retirement Accounts: What does the Agreement provide for each of these assets? What needs to be done? Is a QDRO required? A Qualified Domestic Relations Order is a formal letter of authorization sent to the administrator of a 401k plan, giving instructions on dividing the funds in the plan between the spouses. A QDRO needs to be signed by the Judge who granted your divorce. A new account, in the 401k plan, will be opened for the designated (former) spouse, and the agreed upon funds will be deposited there. Has a QDRO been prepared? If not, when and who pays? Is there a professional designated to draft this order? It’s a legal document and must be drafted by a lawyer, usually a specialist in QDRO’s.
- Real Estate: Release of Liability? Mortgage? Home Equity? Deed transfer – what kind of Deed? Quitclaim deed executed? When? Professional identified? Who pays? Judgment search? Escrow required or refunded?
Check back next month with a listing of the next step you should take after your divorce.
Adrienne Grace brings 30 years of financial advisory experience to clients in transition. Whether that transition is in marital status, household partners, job change or elder year planning, Adrienne's holistic approach to financial transition planning guides clients through prudent preparation as well as rebuilding. With a measured approach to growth and preservation of assets, Adrienne works closely with her clients to develop a sound, comprehensive plan, created for each individual in transition. Adrienne's focus is to help clients navigate their transition eliminating financial pitfalls.
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