Right up there with losing some weight, getting a divorce is high on the New Years Resolution list for many. Is it for you?

January represents a new start, a renewed chance to improve your life, set and achieve your goals, find happiness or just end the misery of a bad relationship.

Christmas fun is over, as is the pressure to put on a brave face for the in-laws and the kids. Holiday overspending bills come in, and maybe you didn’t get anything you really wanted. Financial pressure rises.

It’s also a grey and cold month up here in the north. SADD and cabin fever set in when it’s too cold to go outside, and too-much togetherness can enhance conflict when it’s already brewing.

As we start 2023, the economy is in an interesting place, with high inflation, and lots of job opportunities. Is this the perfect time to salvage the increased value of your house, or maybe to buy it out while the value is dropping? Will an end of year work bonus provide some additional cash for legal and other expenses?

No wonder they call January ‘Divorce Month’.

Is this resonating with you? Let’s talk and see if we can help you find some clarity as you think about the 2 big questions: 

Should I stay or should I go?  And- Will I Be ok?

Schedule a free Financial Clarity session with me at: www.calendly.com/contactAGrace and we’ll tackle this new year together.

A view of the ancient city of Toledo, Spain, spread out like a page from a storybook, seen from our hotel window. A lifelong dream to tour Spain-realized with my month-long vacation last fall.

Me? Take a month-long vacation? Not possible, I told myself for a long time. I’m self-employed. I’ve never been anywhere for a whole month. My clients need me. I do speak Spanish, but to be away for that long? Yadda yadda yadda. All the reasons why I couldn’t possibly.
But I’ll confess, I actually do take my own advice sometimes! And the advice I took years ago was to save. I save 10% from every paycheck. That’s MY money. Not for bills, not for the house, not for anything, really, just to have for FREEDOM. And it’s my freedom money that enabled this trip.

A 7 day tour with an alumni group in Catalonia, 90 minutes north of Barcelona with my ‘significant other’, followed by another week or so of travelling on our own to Pamplona and Madrid. And then he went home, and I had the extra gift of 10 days travelling in Spain with my adult daughter in Madrid, Toledo, Granada.

I/we visited so many of the places I’ve studied throughout my life, as a Spanish speaker, a Spanish major in college, and a Spanish teacher (junior high and college) before I became a financial professional. Truly a lifelong ambition, the top item on my ‘bucket list’. And I did it.

With the power of intention- Yes, I can! And the power of saving. When I started my freedom account, I didn’t have any specific thing in mind. Maybe you will- whatever you dream of: travel? Buying a house? A musical instrument with lessons to learn to play? A friend of mine has a ‘tummy-tuck fund’. Whatever you want can be possible with those two things: An intention, and enough money to fund your dream.

Is it selfish to put aside some money for yourself? Maybe. And maybe we need to revisit the definition of ‘selfish’. Taking care of ‘self’ is not a bad thing, not something to feel guilty about. But that’s a story for another time…

For now- I invite you to start saving. It doesn’t have to be much, but it helps if it’s regular. Something from every paycheck, every week/biweekly/monthly. In an account with just your name on it.

Start now- and see where it takes you when you are ready. The results can be amazing! In Spanish, Maravilloso!

Let’s create a Financial Freedom Plan with YOU at the center! Schedule your free Financial Clarity session today so we can help YOU create a financial freedom plan – www.calendly.com/ContactAGrace

When you decide to remarry, especially either of you have children, here are some tips to create a solid foundation for your continuing relationship.

Consider a Prenuptial Agreement

When you have your own assets, intending to pass them on to your children, and your new spouse has the same-  a prenuptial agreement can be particularly helpful. Honest and open communication about money and what came before, is an important part of a new relationship so it can be be built on trust and fairness.

(For help here, email me for a copy of “How to Talk to Your Honey about Money”)

If either or both of you have gone through a divorce, you’ll want to avoid that contentious negotiation about dividing assets and protect each other the best you can. Consider what’s in those divorce settlements. Receiving alimony likely will end with remarriage, but the obligation to pay a former spouse does not end. Child support continues, and life insurance beneficiary designations may need to remain in place. Many prenups will state that premarital assets, what you own before this marriage, may go to the children, but assets you acquire during the marriage, are split between you.

States have their own rules, most requiring that a half or a third of marital assets pass to a surviving spouse. It’s important that this is specifically addressed in the agreement, to avoid problems later.

Update Estate Planning Documents

It’s important to do this after divorce whether you remarry or not. All of your legal and financial documents, account titles, and beneficiary designations should be updated.  Who should act as your health care proxy? Who is the beneficiary of your life insurance policy? Etc.

Wills: Do you have a will? A will states your wishes about who gets what when you pass away. You’ll want to make certain that your former spouse is not still your beneficiary! If your children are still minors, who will act as their Guardian?

Your children are the ‘natural objects of your bounty’- a legal concept. But your stepchildren, however close your bond with them is, are not.  If you want to leave something to a stepchild, you need to list it specifically.

Do you have a Living Trust? Review the terms of the Trust and who is acting as Trustee.

If you don’t have a Trust, consider putting one in place.

Trusts can be especially useful for blended families. You can  ensure that your assets benefit your surviving spouse during his/her lifetime, while providing that what remains after the spouse’s death passes to your own kids. Consider choosing an independent, neutral trustee, to minimize friction for everyone.

Check Beneficiary Designations

Review the beneficiary designations on 401(k) accounts, IRA’s and other retirement accounts, life insurance policies, or any account with a directly named beneficiary. These assets pass outside of your will, and must be separately updated. Your prior divorce does not necessarily revoke a designation of an ex-spouse as a beneficiary on everything.  Your prior settlement may give retirement assets to your ex- and these cannot legally be revoked. Spousal rights in retirement plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) are subject to special rules and may require your new spouse to sign off if you want your 401(k) to go to your children.

Consider Life Insurance

Life insurance can be a valuable tool to create an inheritance for your new spouse and your children. It’s not uncommon for a pre-existing policy to name your former spouse as beneficiary as part of the settlement, perhaps to secure child support payments. A new Life insurance policy can create the funds to benefit everyone you wish- your kids, your new step-kids, and anyone else.

Family structure is increasingly fluid. As your family structure changes, it is important to make sure that your estate and financial plans reflect your these dynamics. Your financial planner and estate planning attorney can help you take a holistic approach to your future, so you can enjoy the present.

If you need guidance on securing your financial future, contact me at adrienne@adriennegrace.com or schedule your free Financial Clarity session at www.calendly.com/contactAGrace to get started.

Walking from room to room can evoke years of memories, both good and bad. You may have remodeled, decorated and redecorated every inch of it, with treasured items at every turn. Or unhappiness may lurk there, in every dark corner. The equity in your house — the part you own, without the bank — can be your pot of gold, cash to fund your freedom.

However you feel about the house, it’s likely the biggest asset you own jointly, and what you do with it next, will be an important part of your divorce settlement. Most women and mostly all children -would prefer to stay where they are. But this is an important decision to be made by the adults. This is a time of change. The challenge is to separate the emotional from the practical, and take a long, hard look at your home, and
make important decisions about it.

Part of my job, at Transitioning Finances, is to complete the financial analyses needed to help you see if you can afford to stay- and for how long. Here are some key questions for you to consider, if you’re going through a divorce and want to keep the house.

Why do you want to keep the house?

Is it because it’s easier to stay than to pack up and go? Maybe it’s in a convenient location near the kids’ schools or close to where you work? Or, maybe your parents and siblings live just around the corner, and you value the support and connection. Try to keep emotions out of your decision, so that you can reach a divorce settlement agreement that puts you on a solid financial footing.

Can you afford to keep the house? This is important at every income level. How do the expenses of the house impact your soon-to-be-single budget? Is there enough money in the new budge to cover everything? Beyond the mortgage, taxes, utilities, insurance, maintenance, there are the unexpected repairs and constant upkeep. The‘honey-do’ list is all yours now, and you may have to hire professionals to take care of things your spouse used to do. A house costs money. Even affluent women have to thoughtfully weigh their options.

Would some other assets be worth more to you than the house? It’s important to understand that not all assets that are valued the same are actually worth the same.

Here’s an example:
Let’s say you’re trying to decide whether to keep a $500,000 savings account or a $500,000 house that’s completely paid off. On paper, they look the same. Your dream is to stay in this house until your youngest graduates from high school — thee years more, and you’re betting that the house will grow substantially in value. In addition to all the expenses we mentioned above, when you eventually sell your home, there may be
expenses to make the house ready for optimum sale- things to be fixed, painted, landscaped. These expenses are yours. Let’s assume you bought the home for $150,000, your neighborhood is now in high demand, and it’s now worth $500,000. Your capital gain is $350,000.

Sounds great, doesn’t it? But wait. Subtract your $250,000 capital gains exclusion as a single person, and you’ll have to pay capital gains tax on $100,000. At the current capital gains tax rate of 15%, that’s a tax bill of $15,000. Add that to the costs of sale, estimated at 8%, for another $40,000 off the top.

In three years, the savings account could be worth est. $520,000 (at approx. 1.25% ) It could alternatively provide extra cash to cover your expenses. Your house could net you $445,000, after taxes and expenses, only after you sell. You may have a different opinion about keeping the house vs taking the cash.

What other living options are available to you?

Is there a good alternative, for the single person/single parent you will be? Maybe your house is just too big for your smaller family. Maybe a fresh start would be good for everyone. Are there rental options nearby? Smaller properties available? Keep in mind that there are lots of different places you can call “home.”

Going From We to Me can be very challenging. Avoiding the emotional roller coaster of divorce when making important decisions about your family home isn’t easy- but it can be crucial to your future financial health.. With the help of your advisors and CDFA, make the best decision you can, as a part of a comprehensive plan for continued financial stability and security in the future.

Avoid the common mistakes most women make about money, especially when they are in crisis- divorce, widowed, etc.  Schedule a free consultation with me at Calendly.com/contactagrace; or call me at 716-817-6425.

ADRIENNE ROTHSTEIN GRACE, CFP®, CDFA
CERTIFIED DIVORCE FINANCIAL ANALYST
1404 SWEET HOME RD, SUITE 9 AMHERST, NY 14228
716-817-6425/FAX 716-313-1754
ADRIENNE@ADRIENNEGRACE.COM
WWW.TRANSITIONINGFINANCES.COM
MEMBER, NYS COUNCIL ON DIVORCE MEDIATION.
EMPOWERING YOU. FINANCIALLY.

SECURITIES AND ADVISORY SERVICES OFFERED THROUGH CADARET, GRANT & CO., INC., A REGISTERED INVESTMENT ADVISOR AND MEMBER FINRA/SIPC. DAVIS FINANCIAL SERVICE AND CADARET, GRANT & CO., INC. ARE SEPARATE ENTITIES.

Most people contemplate divorce for six months to a year before taking any action. They may limp through the holiday season, filled with family events and traditions, unwilling to confront difficult issues.  But when the holiday bills arrive and one more Valentine’s Day is a disappointment, February 15 can be the day to take action.  It can be one New Year’s resolution that you keep. It can be your way to protect your romantic heart’s future.

But who is going to protect your finances during this difficult transition?

Regardless of when someone decides to end their marriage, I advise them not to try to go thru the process without a Certified Divorce Financial Advisor (CDFA^TM) to protect their financial interests.

You go to a divorce lawyer for legal advice and strategy; your CDFA professional is the instrument to clarify the financial aspects of the strategy.  Your CDFA gets and analyzes the numbers, and helps you quantify your goals.  This makes it easier for your attorney to move forward with the legal process, and can speed a successful outcome.

Working with clients and their lawyers, a CDFA forecasts both the short and long-term effects of the proposed settlement, letting you know what the financial future may bring with Settlement A vs Settlement B, and gives your attorney the reports and tools they need to help settle your case.

So if your Valentine Day is the final disappointment, take heart.  A new start can lie ahead with all of your interests protected.

1.  Allow everyone to grieve and mourn the holidays of the past. Divorce is a kind of death: of unfulfilled expectations, or the family unit we used to be. Don’t try to pretend that the pain isn’t there.  Allow your kids to talk about the past, acknowledge it and move forward to now and how you’ll build your new future.
2. Be Thankful.  Focus on what you and your children have, rather than what you’ve lost.  Revenge is not sweet.  Keeping your thoughts positive will benefit everyone.
3. Watch your spending. More is not always better.  With budgets that may be tighter now, don’t dig yourself a hole that will be hard to climb out of in January.
4. Create New Memories.  Use this time to create memorable new experiences for both you and your children.  Do something different.  Make something together.  Create new ornaments, baked treats, table decorations; take lots of pictures of your new holiday creations.
5.  Try to avoid some of the usual rushing around, to allow for some quiet time.  Be thoughtful.  Think about what will support you and your kids best, during this time of transition.

As you well know, divorce is a long process. My therapist friends tell me it usually takes two years for people to ‘get over’ their divorce.  Sometimes it’s longer. The first holidays are hard but once you get past this one, it will get easier. Really!

Insurance

1. Apply for COBRA or other health insurance, if necessary
2. Change your insurance: auto and homeowner’s/renters from a joint policy to one for you, even if your address stays the same.
3. Draft and execute a new will, trust, power of attorney, living will and health care proxy.
4. Change the beneficiaries on your life insurance, 401k, pension and IRA (Roth and Traditional), 529 plans and any other accounts which have a beneficiary designation.
5. If purchase or maintenance of life insurance policies is mandated, follow up to ensure that it has been completed. Ask for proof, and set up an annual compliance procedure to be sure that policies stay in force with appropriate beneficiary designations

Assets:

6. Divide your assets- and debts- as agreed in the decree. You may need a financial advisor (CDFA) to help with this.
7. Change the locks and access codes and passwords on all secured items: real estate, vehicles, boats, safety deposit boxes, post office boxes, email, bank accounts, etc.
8. Remove your name, or your ex’s name from any joint accounts or mortgages. If the divorce decree requires a quitclaim or warranty deed, follow up until it is executed and recorded.  Your attorney may assist with the deed.  If refinancing is required, start the process as soon as possible.
9. Meet with a financial advisor (Certified Financial Planner, or Certified Divorce Financial Analyst) to put together a financial plan for your new future. If you had an advisor during your marriage, consider working with someone new, to avoid potential conflicts of interest.  Review investments received as a part of the settlement to determine if they are appropriate for your new circumstances.  Reallocate as needed, especially regarding Steps 16, 17, below.
10. If transfers of investment, retirement and savings accounts are included in your divorce settlement (IRA, Roth IRA, other accounts), follow up until the transfers are made into your own accounts. Your financial advisor can be very helpful in tracking this.
11. If a Qualified Domestic Relations Order (ODRO) is required to divide 401k, 403b, pensions, other retirement accounts, contact your attorney, or a QDRO specialist to have the order drafted and sent to the appropriate place(s). Follow up, or have your financial advisor help you follow up until the orders have been fulfilled and retirement funds have been transferred to your name.
12. Hire a new CPA or tax preparer to help with your tax return. Review and adjust your withholding allowances to reflect your new filing status, income level, payment or receipt of maintenance, etc.
13. If you or your spouse is age 70 or over, recalculate your Required Minimum Distribution.

Budgeting, Banking and Credit

14. Review your income and expenses. Update or create your budget to live within your means, or determine how much additional income you need and what you need to do to earn it.

1. Open a checking and savings account in your own name, if you don’t already have one.
2. Establish a credit card in your own name, if you don’t already have one.  Use it wisely!
3. Set up direct deposit or automatic transfer for payment or receipt of child support and maintenance.

Congratulations!  Your transition is underway.  You are several steps farther along your path to empowering yourself, financially.

Even after the judgement is entered, there are many things you must do to be certain that the financial and legal aspects of your life are in order for this next phase of your life.  Review your settlement document carefully.  You don’t want to miss any one of these important actions.

Use this checklist to help wrap important follow-up items after your divorce is final. Not every item may apply to you, but there are likely several for you to take care of.

Documents and Titles

1. Get a copy of the certified divorce decree; make extra copies and store in a safe place. Keep your marriage certificate (original or a certified copy), as well.
2. If you intend to change your name, don’t forget these places:
   1. Driver’s license, car title and registration
   2. Social security card
   3. IRS records
   4. Life, health, disability insurance
   5. Employer records
   6. Credit cards
   7. Bank, brokerage and investment accounts
   8. Professional licenses
   9. Title to real property
   10. Utility bills
   11. Passport
3. You and your ex-spouse will need to determine who will hold the originals of important documents, such as children’s passports, birth certificates, medical records, religious documents, photographs, videos, keepsakes. One of you can keep the original, but the other should have a copy.
4. If your divorce decree requires the transfer of title to cars, motorcycles, or boats, prepare, sign and deliver the necessary documents to complete the transfer. (Don’t forget Step 8, about insurance on those items).
5. Close any joint credit accounts: credit cards, department store charges.
6. Once joint accounts are closed, order a copy of your credit report, to ensure that changes have been made, and there are no unauthorized charges

Here’s a list of questions that I ask each of these clients to consider as we pull together their divorce financial plan. Having a solid understanding of what challenges they will face helps to guide us to create focused post-divorce investment strategies that will help secure a financially sound tomorrow.

1. What about your job? Are you considering transitioning to a new career or finding a position with an existing firm? Do you have a plan for funding this transition? If you are not appropriately licensed/educated, what will it take, in terms of time, training and money to obtain the necessary certifications?
2. Where do you want to live? Urban, suburban, rural? Will any of your children come with you? Or will you be helping to set them up on their own?
3. Do you know what retirement plans you and your spouse have? Are there pensions, in addition to 401k’s and IRA’s ?
4. Do you have a budget in mind, to meet the expenses of your new living arrangements? Do you need help in determining what those expenses are/will be?
5. Is there any debt outstanding: lines of credit, credit cards, car loans, student loans co-signed?
6. Will you need to take on additional debt to fund future housing and expenses, and pay for the expenses of the divorce?
7. Who currently provides health insurance for both spouses? Do you know the cost?  Alternatives for coverage upon divorce?
8. Is there long-term care insurance for either or both spouses? Should such a policy (if currently owned, or available for purchase) be included in the settlement agreement?
9. Have you considered tax consequences of many of the above items: possible capital gains on sale of either/both properties, taxes on withdrawals from retirement plans; capital gains on sale of other investments; tax deduction and liability for spousal maintenance payments? Is there a tax liability from the sale of Harry’s business which may come up in this year’s tax return?

Preparing for a divorce in later years has very specific considerations. Thoroughly educating yourself will help set the way for a brighter future to better enjoy those glorious years of independence.

More than half of all’ grey’ divorces are to couples in first marriages. Indeed, 55% of grey divorces are between couples who’d been married for more than 20 years.

“It’s not as if marital quality has suddenly declined. Instead, I think we have higher expectations now for what constitutes a successful marriage. We expect spouses to be best friends and marriage a source of happiness and fulfillment,” Brown said.

“As women achieve more financial independence and autonomy, frankly, they can afford to get divorced,” she continued. “And after you’ve launched your children and retire, people may realize, ‘Boy, we don’t have much in common, and I could live another 20 years.’ That’s a long time to live with someone you may not be that into anymore.”

Research has found that among divorces of people aged 40-69, 66% of the time it is the woman who initiates the divorce.  For those in good health and with financial resources, a grey divorce may mean an era of freedom and independence, Brown said. But for others, divorce at an older age increases the risk of falling into poverty.

On average, the researchers note, older divorced Americans have only 20% as much wealth as older married couples

That puts the focus on the financial ramifications of later life divorce.

• Diminished resources for retirement with little time to accumulate more
• Change in employment concerns – work longer – try to find a job at a later age
• Potential impact of debt – credit cards, student loans for children, etc.
• Tax consequences of early distribution of retirement funds to meet today’s expenses

Divorce at any age raises very specific challenges – but divorce in later years can be especially devastating on retirement. So- all the more reason to approach divorce at any age with a focus on its effects now, and also ten and twenty years down the road.