The Role of Financial Advisors in Divorce Proceedings

Overview of Divorce Proceedings

A divorce proceeding typically begins with initiating a petition for dissolution of marriage, which starts the process by outlining requests for property division, child custody, child support, spousal support, and other relevant issues. The parties negotiate and reach a settlement agreement. It is very important to create a financial plan during divorce.

Understanding the Role of Financial Advisors

Who Are Financial Advisors?

A financial advisor is a professional who helps people manage their finances and reach their financial goals. They can have expertise in a variety of financial matters, including investments, taxes, insurance, retirement planning, estate planning, budgeting, and more.

Types of Financial Advisors

There are many different types of financial advisors. There are investment advisors, broker-dealers and brokers, CERTIFIED FINANCIAL PLANNERS®, financial consultants, financial coaches, and portfolio, investment, and asset managers.

The Impact of Divorce on Financial Health

Asset Division and Valuation

Asset Division and Valuation is the process of determining the worth of all marital assets (like houses, cars, investments, retirement accounts) and then dividing them fairly between the spouses during the divorce proceedings, usually based on state laws regarding community property or equitable distribution.

Debt Distribution

Debt is distributed in divorces based on the circumstances of the two people involved. Georgia is an equitable distribution state, meaning that the court will divide marital debt in a fair way that isn’t always 50/50. The court will consider many factors, including each spouse’s income, assets, and ability to repay the debt. The court may also consider who incurred the debt, when, and why. For example, if one spouse took on debt for non-marital activities, they may be responsible for a larger portion of the debt.

Tax Implications of Divorce

Your filing status determines your filing requirements, standard deduction, eligibility for certain credits and tax. Your filing status generally depends on whether you’re married or unmarried on the last day of the year.

If you’re separated but not legally separated or divorced at the end of the year, the IRS considers you married for filing purposes until you get a final decree of divorce or separate maintenance.

If you’re legally separated or divorced at the end of the year, you must file as single for that tax year unless you’re eligible to file as head of household or you remarry by the end of the year.

If you’re legally married at the end of the year, you must file as married for that tax year and choose one of these filing statuses.

Married filing jointly: On a joint return, you report your combined income and deduct your combined allowable expenses. For many couples, filing jointly lowers their taxes. In some cases, you may be relieved from liability for taxes owed on a joint return through tax relief for spouses.

Married filing separately: If you file separate tax returns, you report only your own income, deductions and credits on your individual return. The rules are different if you live in a community property state. See rules for community property states. You and your spouse should consider whether filing separately or jointly is better for you.

Head of household: If you’re married or legally separated, one of you may be eligible to file as head of household if all of these apply:

• Your spouse didn’t live in your home for the last 6 months of the year
• You paid more than half the cost of keeping up your home for the year
• Your home was the main home of your dependent child for more than half the year

Changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of Raymond James, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

How Financial Advisors Assist in Divorce Proceedings

A financial advisor can assist in divorce proceedings by providing professional analysis of a couple’s combined assets and liabilities, helping them understand the financial implications of different settlement options, calculating potential alimony and child support payments, and developing a post-divorce financial plan to ensure stability for both parties involved, often working in collaboration with divorce attorneys to navigate the complex financial aspects of the separation process.

Creating a Comprehensive Financial Plan

A financial advisor will create a comprehensive financial plan. This includes evaluating assets and liabilities, retirement accounts and benefits, child support and alimony calculations, and more.

Choosing the Right Financial Advisor

Choosing the right financial advisor is crucial to help you organize your finances in a divorce. First, you need to make sure your advisor has all of the correct qualifications and credentials. You also need to make sure your financial advisor has experience with divorce cases. Their expertise should help you achieve the best possible financial outcome of this challenging time.

Conclusion

Final Thoughts on Navigating Divorce Financially
If you have any questions or you are looking for a financial advisor, Windsor Wealth will help lead you in the right direction. Give us a call at 678-971-1337 or fill out the contact form here: https://windsorwealth.management/contact/.

(Source: IRS.Gov)

Any opinions are those of Windsor Wealth Management, are subject to change, and are not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax or legal issues, these matters should be discussed with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.