Do You Need a Divorce Financial Planner?

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You may have seen ads for Certified Divorce Financial Analysts or for divorce financial planners. These professionals specialize in helping people who are divorcing understand their assets, plan a settlement, and understand the possible value of their assets in the future. They also may be able to appraise assets. They may be skilled in tax law, understanding insurance options, and retirement planning.

Understand the Overlap

The problem with divorce financial planners is that many of the services they offer overlap with those other more qualified professionals offer. For example, if you are considering the tax ramifications of selling the marital home and distributing a pension plan, you could turn to your tax adviser who specializes in this information. If you are trying to create a budget or work out an investment plan moving forward, you could consult your financial adviser who is an expert in these topics. If you are trying to complete the financial affidavit required for your divorce, your divorce attorney would be an expert in this. If you needed to get an appraisal of a home, jewelry, collectibles, or antiques, you would turn to an appraiser who specializes in that particular area. The best way to get accurate, current information is to work with someone who specializes exactly in that area.

A Combination of Resources

There are some benefits to using a divorce financial planner. He or she provides one stop shopping for all of your financial concerns, so instead of hiring an appraiser, tax specialist, and financial adviser, you could turn to a divorce financial planner to handle all of your concerns. In addition, divorce financial planners are trained to consider all of these issues together and within the context and laws of a divorce, so they may be able to provide a clearer and more complete perspective. If you have a very complex divorce that involves several businesses, homes, investment accounts, and assets it might make sense to work with someone who can look at them as a whole. Additionally, a divorce financial planner is used to working closely with divorce attorneys and may be able to provide the information in a more succinct format, making it more easily able to be used in your case.

There are pros and cons to using a divorce financial planner. In the end, you’ll need to decide if he or she can provide the best services for your needs and if the expense is worth it.

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Tax Time

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photo credit: Arvind Balaraman

Taxes are on everyone’s minds as we inch towards April 15. As if taxes weren’t complicated enough, being a divorced parent adds another wrinkle to the process.

Child Exemptions

At this time of year, I get a lot of questions about the dependency exemption for children and which parent gets to claim it. Your divorce decree may specify how this exemption is to be taken. Some parents alternate years. Sometimes one parent always gets it. So, first check your divorce decree. You should follow what it orders. However, you are permitted to change this if you both agree to do so. You may be in a situation where one parent earns a lot more than the other this year and the exemption will be of more value to that parent (always check with your tax preparer to find out if and how you will benefit from taking the exemption). If you want to shift the exemption to the other parent, there is an IRS form that allows you to do so.

Default Rule

If your divorce decree does not specify which parent gets the exemption, the IRS does. According to the IRS, the parent who has the child for the most nights in the year is the parent entitled to take the exemption. Period. It has nothing to do with who pays child support or how much is paid or what kinds of expenses the child has. This is the default rule to follow.

Head of Household Status

Head of household status is separate from the dependency exemption. Even if your ex takes the dependency exemption, you may qualify for head of household if your child lived with you more than half the time, you paid more than half of your household expenses, and you are unmarried. As always, check with your tax preparer to make sure you qualify.

MSAs and HSAs

Although the IRS has a hard and fast 50% rule for the dependency exemption, it is possible for both parents to claim children for the purposes of Medical Savings Accounts (MSAs) and Health Savings Accounts (HSAs). If you have one of these employer-provided benefits, check with your tax preparer about claiming your child.

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What to Do with the Diamonds?

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photo credit: Graeme Weatherston

If you’ve recently separated or divorced, you’ve probably taken off your wedding rings. You might also have some other jewelry items your spouse gave you that you no longer wish to wear.  But what should you do with them? There are a surprising number of great options that will allow you to get those rings out of your jewelry box and off your mind.

Save for the Kids

Some women choose to save their jewelry for their children or grandchildren.  A family heirloom can have a lot of emotional value in later generations. And resetting a family diamond for an engagement ring can save your kids big bucks. If you decide to hang on to your jewelry for family, store it out of sight in a safety deposit box or in a box in your file cabinet.

Restyle for Yourself

You can have gemstones reset to make pendants, earrings, new rings, or other pieces of jewelry. Giving an old gem new life can help you feel as if you’ve taken concrete steps to retool your own life.

Get Cash

Gold can be sold to local jewelers for good prices. There are also some sites that specialize in helping you turn your wedding jewelry into dollars. IDoNowIDont.com, Ex-cessories.com, and ExBoyfriendJewelry.com allow users to sell their jewelry – and even vent a bit. The cash can be used to pay divorce costs, help you afford a new home, or buy a few decadent things just for you.

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