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How to weather the financial implications of a divorce smartly

There are some key financial considerations to keep in mind during this tough process


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According to statistics, the divorce rate in Colorado is approximately four divorces for every 1,000 residents.  Average divorce rates in the U.S. are around 3.6 divorces per 1,000 people. Experts expect this trend to increase as the economy continues to improve, fueled, in part, by the diminished financial burden of ending a marriage.

Getting through a divorce can often be emotionally and financially challenging for all parties involved. There are, however, some key financial considerations that are important to keep in mind and may help during the tough process. 

Assemble a team of advisors you feel comfortable with who will have your best interests at heart. Often, people find that having their own lawyer, accountant and personal counselor helps them get through the process. This team can make sure things are done legally and properly. Working with a financial advisor can help educate you on the financial implications of different divorce settlement proposals. Divorce will most likely be the largest financial transaction of your life. Having someone by your side to offer insight on the short- and long-term impact of dividing property, analyzing retirement plans and helping create a realistic budget can be crucial for anyone going through a divorce.

Know the process.

While we tend to rely on our team of professionals for their support and knowledge, we should also make sure we understand how things work in the big picture. Educating yourself about some of the basics is key. Take time to learn about the concepts behind marital vs. individual/non-marital property. For example, it's common for one spouse to end up with the primary residence while the other may get a seemingly equal monetary amount in assets such as brokerages, retirement accounts and savings. However, while the math may show a true 50/50 split, the reality is that the spouse with the primary residence owns the asset on paper.  Similarly, this can occur when one spouse is the owner of a closely held business. It can be very difficult to calculate value of the overall business, so this, too, can leave one spouse with an asset than could have little cash conversion while the other gets more liquidity with the estate.

Be sure that your plan for a new beginning includes both short-term and long-term goals for yourself and your children. We often get caught up in the moment and forget that decisions made today can affect everything from our kids’ college education to our own retirement. While it’s easy to do, don’t put your head in the sand or freeze while going through a divorce. Remember, it’s crucial to stay focused, educated and looped into the process. Otherwise, you risk becoming a victim.

Keep your options open.  Divorce is a transition that offers many options in terms of selling and splitting assets. Be sure to do your research and talk to your advisors about which options best suit your situation.

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Shelley Ford

Shelley Ford is a financial advisor with The Pelican Bay Group of Morgan Stanley Wealth Management in downtown Denver.  Shelley can be reached at 303-572-4839 or visit http://www.morganstanleyfa.com/shelley.ford/.

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