Besides the emotional toll of divorce, the financial toll of splitting finances, assets, and liabilities can be devastating for couples who dissolve their marriage partnership. I recently asked Christina Boyd and Barbara Bencini of Merrill Lynch’s Eckerline, Bencini and Boyd group if they would share some advice for divorcing couples. Ms. Boyd and Ms. Bencini will be presenters at The Divorcing Divas Happily Ever After event in Saint Louis Park, Minnesota on Saturday, October 15th. More information below.
1. What is the most common financial problem you see for divorcing couples right now?
Christina: “One issue we’re noticing is that the economic environment has made it difficult for couples to afford a divorce. Divorcing couples may find it a challenge to meet short-term needs, such as lawyer fees, custody fees, and a second residence. Additionally, a divorce can alter a couple’s long-term goals and retirement plans by cutting assets – including retirement savings – in half, changing pension distributions, and more.” How can couples work through those issues of short-term cash flow and long-term insecurity? Christina: “Working closely with a financial advisor during this difficult time can help you stay on track with balancing your short-term financial needs and long-term goals.”
2. What steps should divorcing couples take during the divorce process to protect their financial health post-divorce?
Barbara: “In Minnesota, we are fortunate to have the ‘Financial Early Neutral Evaluation’ (ENE). The purpose of an ENE is to provide parties with an early neutral evaluation of one or more financial issues with the expectation that if the parties have the neutral information, they will be better able to reach an early settlement before the parties’ financial resources are expended on litigation. This process is somewhat similar to using a mediator, but may be even more successful. The goal of the ENE is to eliminate time spent in court and on litigation fees – so it is worth considering for divorcing couples concerned about protecting their financial health. Additionally, in general, couples should try to separate assets as soon as possible and eliminate joint accounts. It is also critical that both partners are aware of all of the assets they have and how they are held.
“Ideally, both partners are involved with their family’s financial plan from the beginning of their marriage. But if one party has not been and a divorce is pending, it is in everyone’s best interest to work with a financial advisor they trust and who can help educate them on the current state of their finances, as well as what is advisable for the future division of assets.”
3. Are there any common pitfalls you see when couples divide their assets?
Barbara: “We sometimes find that couples do not have enough diversity in their investments once they are divided. In general, we recommend dividing the assets evenly down the middle – each partner gets half the stocks, half the bonds, etc – so that both portfolios stay properly balanced.”
4. In my own experience, it was really difficult to go from being a stay-home mother who never dealt with the family finances to an independent woman concerned about monthly bills, savings, and long-term retirement. What advice can you give someone like me?
Christina: “From the start of the marriage, I’d recommend all women – stay-at-home or working – should be involved in all of the financial decisions. But if this hasn’t happened and a divorce is pending, then certainly now is the time for financial education, and to partner with a trusted financial advisor. With the right financial advisor, a woman can feel confident that she is receiving goals-based financial guidance that will position her well now and for the future, so that she can live the life she wants.”
Barbara: “Find a financial advisor that you trust, and with whom you have an active, meaningful connection. Now is the time to educate yourself and plan for your independent financial future.”
5. What services do you provide to divorcing couples or already divorced individuals who are trying to regain financial security?
Christina: “We act as counselors for our clients’ financial future, help advise on the division of assets, and educate them on how to move forward with their retirement plans and other long-term financial goals. We will also work with clients to create a cash flow worksheet. It is essential that they are honest about how they spend their money and on what so they can better allocate their finances.”
Barbara: “I emphasize that clients should stick to their budget and I encourage them not be afraid to cut back on their expenses. I work with clients to ensure that they take responsibility over their finances. Financial empowerment comes from education and truly becoming really aware of your cash flow — knowledge is power.”
Ms. Boyd and Ms. Bencini can be reached at (952) 476-5612 or (800) 782-1691. You can find out more about their philosophy and services on their website.
Happily Ever After is “A day of encouragement, inspiration and empowerment for individuals who are considering divorce, getting divorced, or are divorced” and is presented by The Divorcing Divas. The event will be held at the Minneapolis Marriott West, 9960 Wayzata Blvd in Saint Louis Park, MN on Saturday, October 15th from 9 am until 5 pm. More information can be found on the Divorcing Divas website.