Financial planning prior to a divorce settlement is of the utmost importance. Highly trained financial planning professionals often meet with divorce attorneys and their clients to discuss the potential tax consequences of a divorce settlement, especially when there are substantial assets to be divided. During this time, they may touch on the long-term ramifications that cashing out shares of pension plans may have and also provide additional negotiation tools in cases of hotly contested settlement agreements.
For example, proper financial planning helps determine the tax filing status of a soon-to-be-divorced person. Options include filing jointly one last time - but also being jointly on the hook for any tax liabilities - or investigating the 'head of household' filing option. Financial planning prior to a divorce also discusses the transfer of retirement accounts, the partial or total liquidation of these assets, the setting up of new retirement accounts to ward off tax liabilities and the disposition of investment properties.
It is essential for a couple with a joint business interest to take financial planning seriously, since the split of the partners could result in the insolvency of the company. There are options such as buy-outs or silent partnerships, but this kind of asset and liabilities disposition should happen with the help of skilled financial planning and negotiating prior to a divorce action; in fact, it should - ideally - take place while the parties are still in one accord and in agreement about property settlements.
This kind of financial planning is available from many sources, but a certified financial planner (CFP) is an expert in all things financial. They hold university degrees, professional certifications and have shown mastery in integrated financial planning that includes insurance issues, divorce settlements, investments and securities. Not surprisingly, divorce attorneys worth their salt keep certified financial planners on the speed dial. While a lawyer excels at investigating the merits of a settlement proposal, it is the financial planning pro who shoulders the burden of dissecting the financial proposals.
In largely uncontested cases, divorce planning assists both spouses in ascertaining how the changes in financial circumstances, tax filing status and overall income and expenses will require them to re-evaluate their retirement savings. If younger children are involved, financial planning prior to a divorce also helps to nail down how to handle spousal support, child support, and future college spending and insurance questions pertaining to the youngsters.
While attorneys will do their level best to guide the clients through the legal minefield of marriage dissolution, it is the wise client who will also consult with a certified financial planner - prior to signing any kind of divorce settlement agreement.
Author Resource:-
Stephen Daniels is an acclaimed
SEO 2.0
researcher of best practices, products, and services for a wide variety of industries. For financial planning in Houston, Texas, he highly recommends
Lifetime Planning
, for their expertise in financial planning before, during and after a divorce.
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