For the single (again): Post-divorce financial planning

Four steps to financial independence

Q – I’m recently divorced, and I’m wondering what my next steps financially should be. My ex-husband and I shared a financial advisor and had both joint and separate accounts. That’s been sorted out, and the settlement has been finalized. But now what? Should I keep the same advisor or look for a new one? And what are the next steps in planning? – Monica G., Vaughan, Ontario

A – Once your divorce settlement finalized, the next step is to make that settlement last. And that’s where your financial plan comes in. You are now independent, and that places your former advisor in a potential conflict-of-interest situation if your ex-husband continues to use that advisor’s services. Generally you’ll want to engage the services of a new planner, and your current financial advisor may even recommend this. However, that’s something to discuss with your legal counsel or other independent third parties.

After a divorce, you’ll want to get back on your feet financially as fast as possible. If you’ve found a new financial advisor, you’ll need to have a frank and open discussion about your life goals, your values, your investment goals, and financial objectives. And you’ll want to get to know your new advisor so you can you feel confident in developing an action plan. That will include the following key points:

What you’re worth. You’ll determine what you own and what you owe after the settlement. That will be your starting point to create your independent plan.

Your priorities. Short-term priorities include immediate cash flow for paying the bills (including mortgage and other debt) and everyday expenses for yourself and your dependants. Longer-term goals will include retirement planning, healthcare, and estate planning, including life insurance.

Investment planning. At this stage, you don’t need any more uncertainty in your life, and you have stay well inside your comfort zone. Your financial planner will help with a statement of investment objectives, which will be used to set the best allocation of your investment assets. Your planner will then use this framework to guide investment professionals in the overall strategy for managing your assets.

Taxes, estate planning, and insurance. Because taxes can have a big impact on disposition of assets, you’ll really need expert help. Typically your lawyer will ensure taxes are minimized in any settlement and division of assets. Afterwards, your financial planner should be able to call on her network of professionals to make sure your taxes are minimized through careful tax planning and a focus on tax-efficient investing. They’ll also work with you to ensure your dependants are protected with the proper wills, an estate plan, and life insurance.

Robyn Thompson, CFP, CIM, FCSI, is the founder of Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management for high net worth individuals and families. Contact her directly by phone at 416-828-7159, or by email at rthompson@castlemarkwealth.com for a confidential planning consultation.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned are illustrative only and carry risk of loss. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please contact the author to discuss your particular circumstances.