Going through a divorce is often a difficult experience. In many cases, even when it’s amicable, there’s so much pressure on both sides to make sure everything is fair (without shooting yourself in the foot) that it can feel truly overwhelming.
This is where taking the time to build your divorce team can make a world of difference. Having the right professionals in your corner, regardless of what your divorce looks like, can help you, your spouse, and your children navigate the complexity of the divorce process. So, who should be on your divorce team? And is there a specific order you should hire them?
The Different Phases of Divorce
When thinking about hiring a divorce team, it’s helpful to view your divorce in three distinct phases:
Pre-Divorce Phase: This is the phase before anyone’s actually filed anything official with the courts. Essentially, it’s the “Thinking About It” phase. You and your partner are determining whether divorce is the right option for you, and starting those conversations. There’s a lot of information gathering that can (and should) be done during this phase to make sure you and your partner are properly educated on what comes next.
During Divorce Phase: The next phase is when papers have actually been filed with the court and the process has been set into motion. Certain restrictions with financial assets happen now, and you and your partner enter talks/negotiations on agreements about who ultimately gets what, and how assets will be divided among your two new households.
Post Divorce Phase: This is where your divorce is final. The process may have been emotionally painful, even if your divorce was amicable. You’re expected to enter your new life and separate from what has happened before, which often brings its own challenges.
Phase One: Pre-Divorce
When you’re preparing for a divorce, it can feel like the unknown is both daunting and exciting. This stage can last for months, or even years, as you and your partner determine if staying married is what you both truly want. Here are several questions to ask yourself:
- Where am I going to live? You may want to stay in your family home, or sell and divide the profit to support both you and your partner’s financial future.
- What will custody and coparenting look like? This question is often emotionally heavy and requires a significant amount of time, thought, and consideration.
- What accounts do we have and what assets do we own? Check your bank statements and credit card statements to better understand your overall financial picture.
- Are there financial obligations or debts I need to know about? Ideally, you’ll already know what debt you and your spouse carry, but if not – now’s the time to dig around and find out.
- What are my fixed expenses? Again, checking your statements, or tracking your family’s spending using online budgeting tools like YNAB or Monarch Money can help you get a handle on what’s going out the door.
- What are my state’s laws about divorce proceedings? For example, in the state of California, you have a six month “cooling off” period after divorce papers have been filed. Additionally, any property purchased after marriage is considered “community property” and is split 50/50 between partners, while property purchased before marriage is technically the property of the individual purchaser.
These questions can help you start finding clarity on what life might look like during and after your divorce proceedings, and hopefully build some confidence that this new season will be okay – even if it’s one you aren’t 100% prepared for.
Your Divorce Team: At this stage in the game, you may not need to officially hire anyone. However, sitting down with a family law attorney can help you figure out where it might be helpful to start.
Phase Two: During Divorce
This phase starts by somebody filing divorce papers. The state of California is a no-fault state. In other words, either partner can ask for a divorce and there doesn’t have to be a specific reason. From there, the disclosure process can begin. Essentially, both parties are forced to disclose all information about assets and liabilities. At this point, both parties can opt to skip hiring an attorney and go straight to mediation. This allows you to avoid court and come to an agreement without having to sit before a judge.
However, even if your divorce is amicable and you both want what’s best for each other, I usually recommend hiring a few key players to get you through the process:
- A good mediator. A mediator can help you navigate your agreement outside of court and is a neutral third party. However, it’s worth noting that a mediator’s job is not to make sure things are equitable – it’s to get the two of you to agree. So, while they’re helpful in getting the divorce to a final settlement, you also need a…
- A Certified Divorce Financial Analyst or financial planner who is educated in the finances of divorce. You want someone who understands the dollars and cents of divorce – and who will help make sure that neither of you are giving too much away during the process. This planner is your personal advocate, someone in your corner who has your best financial interest in mind.
- A family law attorney. Even if neither of you have the intention to “lawyer up”, it’s wise to have a family law attorney look through your final settlement to ensure nothing was missed in the process.
When you enter the “During Divorce” process, you’ll also begin a temporary restraining order on all assets. All this means is that, during the divorce proceedings, nobody can move assets around, pull big chunks of money out for themselves, change beneficiaries, or otherwise financially jeopardize their partner. This is important to note, because the divorce process may take a while and no major financial changes or decisions can be made during this time.
The negotiation process may seem time consuming and, frankly, a bit tedious. However, with a divorce financial planner on your team, you’ll be able to answer questions like:
- Can I afford to keep the house?
- How will different assets be treated from a tax perspective?
- How will the division of assets impact me now and impact me as I approach retirement (or other stages of life)?
Their job is to not only help you through this process, but also help you look ahead and guide you toward decisions that can ultimately benefit you for decades to come.
Phase Three: Post Divorce
There are so many benefits to working with a divorce financial planner throughout your divorce process, but one of the biggest “wins” is that once you enter the post-divorce phase, you already have someone in your corner who knows your financial life backwards and forwards. Many divorce financial planners and CDFA™s don’t just help clients through their divorce. They partner with them on an ongoing basis to manage their finances into Phase Three and beyond.
Once they’ve helped guide you to and through your divorce, they can help answer questions like:
- What type of cash flow can I expect?
- How should I navigate taxes as a newly single filer?
- What do I do with alimony and how does that impact my tax situation?
- If I have to pay child support or alimony, how do I set that up?
- How do I save for retirement as a single earner?
Their job is to walk alongside you to navigate all of these questions, then create a financial plan that sets you up for success both now and in the future.
One Actionable Takeaway As You Transition Through Divorce
If you’re moving from married to single life, it can feel incredibly overwhelming. There are likely hundreds of financial and logistical questions swirling around in your head, and the emotional pressure of “getting it right” can be intense. One practical step is to take a long-term perspective.
As financial planners, one of the number one things we ask clients is, “What is your goal? What are the big-picture dreams or your “why”?”
Getting clear on that, and using it as a motivator, can help you to stay on track. Additionally, taking even a few hours to sit with a financial planner to get a snapshot of what life looks like now, and what it could look like post-divorce, can help bring a lot of clarity to your situation and empower you to move forward with confidence.
Set Yourself Up for a Smooth Transition
You’re embarking on a new chapter in your life – whether you chose it or not – and that can be both intimidating and exhilarating. With the right support system in place, you can get through this and thrive.
If you’re interested in learning more about what it’s like to work with a divorce financial planner or , or if you have further questions about how divorce and finance intersect, schedule a call with an Abacus advisor today.
