Atlanta Financial Blog
Financial Planning During Divorce and Overcoming Bumps in the Road
July 26, 2017
Planning for your future can be confusing and intimidating even when life goes according to plan, but when you are faced with an unexpected “turn in the road” it can be overwhelming and cause a feeling of hopelessness.
Recently, I was referred to a new client who was facing just such a turn in the road. A 45 year-old mother of two young teens was unexpectedly going through a divorce after 20 years of marriage. Her husband had built a successful career as a high level executive in a large company, and they were making good progress on their ambitious financial goals. While she had a vibrant career prior to having children, she had opted to give up that career once her children were born due to its heavy travel demands. Focused on raising her children, she had been happy that her husband was willing to take charge of all of their finances. Suddenly, she found herself trying to understand what they had, what her settlement was likely to be, and whether she and her children were going to be “ok” financially. Emotions were running high on both sides, and she was facing important financial decisions that would have a huge impact on her and her family, both now and long into the future.
Having worked with many clients going through divorce, I knew how important it was to begin working with her and her attorney as early in the divorce process as possible. Working hand-in-hand with her legal team, we gathered all of the financial data and began to understand the marital assets held personally, as well as the many benefit plans available through her husband’s company. We tackled the complex task of estimating the near-term and long-term value of various components of his compensation package. Once we had a thorough understanding of all of the marital resources, we were able to evaluate the current and long-term impact of various settlement options on both spouses and the children. With a clearer understanding of the difference in their likely current (and future) earnings, we were able to propose an equitable arrangement that provided an income stream to allow her to transition back into the work force and that took advantage of their different tax brackets to lessen the after-tax cost of the settlement to her husband.
Next, we used financial projections to help her envision the lifestyle that she could support and began deciding on a course of action and any changes she would need to make. Would she be able to stay in her home? Would she need to go back to work? How would she afford college tuition for the children?
As we worked together to answer these important questions, I learned that staying in the marital home was very important to her, but she was torn about the impact of going back to work on the children during this difficult transition. As we looked at the cost of the home and her budget, it became clear that maintaining the current home as her residence long-term was going to put a lot of pressure on her cash flow unless she went back to work. We prepared projections showing different options, including staying in the home until her alimony ended. As we discussed her priorities and what she most wanted for her children, she realized that postponing going back to work was a higher priority than staying in her current home. She ultimately decided to stay in the home through the end of the current school year and then downsize to a smaller house in the same school district.
Once a settlement was reached, we continued to work through Atlanta Financial’s proprietary 16 step process for clients going through divorce. At the end of the process, she was on solid footing with a long-term financial plan to help her accomplish her goals, as well as a workable cash flow plan to help her manage her family’s needs in the short term. We also helped her address other important needs like establishing credit, revising her will and power of attorney, getting needed insurance on herself and her ex-husband and assisting with decisions regarding the sale of the marital residence, and purchase and financing of her new home.
Using our ongoing progress meetings, we helped her navigate the inevitable “bumps in the road” that come along, and she now has the necessary tools to work toward a bright future for her and her children.
*Actual performance and results will vary. This case study does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial adviser should be consulted.
Millionaire & Former Zappos CEO Died in November Without a Will. Here’s Why That Makes Things Extremely Complicated
Tony Hsieh, former CEO of Zappos, died at 46 due to smoke inhalation from a house fire over the Thanksgiving holiday. Several months prior, Hsieh retired from his position as CEO of Zappos with an estimated net worth of $840 million.1 Since his death, his family has determined he died intestate, meaning he had no will. In response, his family has filed for access to the former CEO’s accounts and assets.2
Late into the day on December 21, Congress finally passed a much anticipated (and arguably long-overdue) second stimulus package. Signed by President Trump on December 27, the new stimulus package has already begun affecting Americans as we rang in the new year. Spreading $600 billion (notably much less than last March’s $2 trillion deal) amongst businesses, hospitals, families and individuals, this economic stimulus package is designed to bring relief to those experiencing the financial hardships caused by the continuation of the COVID-19 pandemic. Below are some highlights of the bill’s coronavirus-related relief efforts that could affect you, your family and your business in the near future.
When you think of the most common New Year’s Resolutions, what immediately comes to mind? Generally, the most popular resolutions include getting in better shape, getting organized, and improving wealth and well-being. The ultimate goal is to grow in ways that enhance and better our lives.