Do You Have a Financial Plan for Divorce?

Do You Have a Financial Plan for Divorce?

By: M. Scott Gordon

If you are thinking about getting divorced in Chicago or the Chicago area but have not fully considered the financial implications, you are not alone. Is one of the reasons you have yet to develop a financial plan because you assume you are good with finances and have the skills and knowledge to handle the economic repercussions of divorce? According to a recent report in ThinkAdvisor, a poll from TD Ameritrade shows that a majority of Americans are “confident of their financial prowess in the face of these life events,” and thus do not plan ahead. If you are getting ready to file for divorce or if you are even thinking seriously about dissolving your marriage, now is the time to begin making a financial plan.

Majority of Americans Planning to Divorce Do Not Have a Financial Plan

According to the report, “65 percent of marriage individuals do not have a financial plan in place in the event of a divorce or a spouse’s death, yet 72 percent of men and 62 percent of women expressed confidence in their ability to manage their own financial situation if faced with one of those events.” In other words, a majority of Americans do not have a financial plan in place for divorce, and a majority of those surveyed also believe that they do not need one because of their ability to handle finances. To be sure, the survey also determined that “divorced Americans were likelier to trust themselves than to trust a financial advisor to manage their savings and investments.”

Given that about 40 percent of marriages currently end in divorce, Chicagoans and Americans throughout the country should be thinking about financial plans, especially if they are thinking about filing for divorce. Moreover, many seniors who are already in retirement are also getting divorced, which can result in a trickier and even grimmer financial situation for both parties. According to the managing director for TD Ameritrade, “advance planning could provide a much-needed boost in financial security for those who unexpectedly end up alone at any phase of their lives.” Indeed, we should all have long-term financial plans, and considering divorce should always be part of such plans.

Divorce Often Creates Financial Difficulties

The results of the TD Ameritrade survey also determined that only about 25 percent of Americans who are currently divorced feel that they are financially secure, while more than 40 percent of married people indicated a sense of financial security. On a related note, nearly 50 percent of people who are divorced do not save or invest any of their monthly take-home pay, while only about 30 percent of married people are in this situation. And nearly 50 percent of divorced people surveyed reported that they were concerned about having enough money in divorce.

According to an article from Intuit Mint, understanding your role in the finances of your marriage can help you to prepare for the financial consequences of divorce. For instance, what are the monthly bills in your home, and what percentage of your income goes to pay them? How much do you save each month in your marriage, and how does your salary play into the savings or investments?

Discuss Your Case with a Chicago Divorce Lawyer

A divorce lawyer in the Chicago area can help you to handle the financial aspects of divorce and to contend with other matters such as property distribution and child custody. To learn more, contact Gordon & Perlut, LLC today.