After the Loving: Post-Divorce Financial Planning

Often during the divorce process, clients rely on the attorney for guidance not only for legal issues but also for financial issues — or need help in locating professional financial experts. You have helped your client get a fair financial settlement; now the client must become financially independent.

Some of the financial issues that may arise include:

• Standard of Living
  • Based on the spending habits of the client, will he/she be able to live within the confines of his/her income and the awarded alimony and/or child support as well as other income?
  • Does the client understand the importance of budgeting?
• Retirement Planning
  • Will the client’s retirement assets support him/her through the retirement years?
  • Do the beneficiary designations need to be changed on IRA’s and other retirement accounts?
  • Does the client know to change his/her name, if applicable, on their social security card?
• Estate Planning
  • In most instances, it will be desirable to amend wills to remove the former spouse as a beneficiary.
  • Trusts may have to be set up for children to prevent potential control of assets by the former spouse or a new spouse.
• Insurance Planning
  • Life Insurance
    • Is there an agreed amount of life insurance that the parties must have on one or each other’s life?
    • What controls are in place to verify the coverage is maintained?
    • Will it be sufficient or should additional insurance be purchased?
    • Do the current beneficiary designations still apply?
  • Health Insurance
    • If the former spouse will no longer cover the client’s health insurance, what options are available for the client to get new coverage?
  • Other Insurance
    • Should the client get disability insurance or long-term care insurance?
• College planning for children
  • Incorporated into the settlement, is there a requirement that the former spouse either completely pay for or contribute to the cost of the children’s college tuition, room and board?
  • If so, what controls are there to insure that there is an investment program in place? Will that be sufficient to pay for tuition, room and board and should additional funds be set aside for college?

Marsha Baldinger, CPA, CFP, is director of Forensic Services at Rosenberg Rich Baker Berman & Company, P.A. with offices in Bridgewater and Maplewood, New Jersey. Marsha concentrates on business valuations and unreported income investigations with an emphasis on matrimonial actions. She has extensive experience in forensic investigations and funds-flow tracing, business valuations, and consultations regarding financial and tax aspects of settlement options. Marsha has authored articles as well as lectured for the National Organization of Women and the Institute of Continuing Legal Education (NJ). She is a graduate of George Washington University.