On July 29th, Huffington Post published a blog post entitled, “We’re Getting a Divorce, Now What?” in which a women-focused financial organization offered nine tips about financial issues to consider in a divorce. I was skeptical going into the article/blog post when I saw it was offered by Women & Co. I’m not skeptical because Women & Co. is a pro-women organization. That’s fine. The content is relevant to both sexes.
What made me skeptical is that Women & Co. is owned by Citi. Often when financial institutions offer financial advice to divorcees they tend to use the “advice” to hock their products. The tips offered here were actually very useful and did not promote any Citi financial services.
The link is here: http://www.huffingtonpost.com/women-co/were-getting-a-divorce-no_2_b_3659889.html?utm_hp_ref=divorce&ir=Divorce. I chose not to rehash their content or rewrite it on my own blog.
Financial planning in a Texas divorce
Here’s why Women & Co. almost got it right. Each of the nine tips offered are useful and accurate. However, they are missing the larger picture. Women & Co. left out the importance of developing a financial plan and then piecing together the components discussed. It’s kind of like trying to make a meal with nine ingredients but no recipe, so you’re just trying to figure out the best way to prepare nine ingredients and hoping it all comes together as something edible in the end. Whether you will file a petition for divorce, have already filed, or served with a divorce petition, you need to have a financial plan for how you will survive the divorce process and how you will re-establish yourself financially after the divorce
Many people come into divorces with some idea of what they want out of the marital finances or assets but they are not always the best plans or the plans achievable in divorce. People often say things like, “I just want my half” or “I just want X, Y and Z and he/she can have the rest”. Sometimes those straightforward objects are the right plan; but some financial planning and review of marital assets (and debts) should occur before finalizing that plan.
Here’s a good example: you may only want a handful of items like your clothes, your car, your retirement accounts and the kitchen appliances. That might be easily achievable but what if there are some credit cards or medical bills outstanding? Certainly you can let your spouse have those debts to pay but if your name is attached to those debts and your spouse doesn’t pay them then it could negatively affect you financially and ultimately you may have to pay those debts even though you “gave” them to your spouse.
Texas divorce financial planning
In my opinion, helping clients plan for their financial needs both during and after the divorce is a critical part of the divorce process and one of the most important reasons why people entering a divorce should hire legal counsel (planning for parenting issues is also extremely important). It is virtually impossible in Texas to undo the division of property once a judge puts ink to the divorce decree. You can modify custody issues but property division is almost always permanent. If you give your soon-to-be-ex-spouse a financial windfall, you cannot take it back down the road. That is why I believe financial planning is a core component of any divorce.