Top 10 Considerations in a Divorce in New Jersey
February 21, 2020
BY: Sharon L. Klein
By: Sharon L. Klein, Guest Blogger
A divorce is one of the most stressful and difficult experiences you may face. Trusted guidance and support from a team of advisors who put your best interests first is key. As you transition from one chapter of your life to the next, what follows is our pick of the top 10 considerations to address in a divorce in New Jersey. For seamless and integrated advice, your financial advisory team should work collaboratively with your attorney and other advisors and have the breadth and depth to provide a full spectrum of services.
1. Have you established your own individual banking accounts for your everyday financial needs and reviewed your new balance sheet?
You likely will need to open accounts in your individual name and develop a list of your revised assets and liabilities.
2. Do you need financing that is customized for your unique situation?
Custom credit can provide you with a reliable source of funding for unforeseen expenses, real estate purchases, and business investments. You’ll need an experienced professional to evaluate your options and provide lending based on your unique assets—including specialty or illiquid holdings. Solutions to consider include:
• Bridge financing to help with a significant purchase
• Marketable securities-backed lines of credit, including restricted and concentrated stock
• Specialized asset-backed loans secured by partnership interests, fine art, yachts, and aircraft
• Residential and investment real estate financing, including lines of credit
3. Have you projected how your settlement will sustain your lifestyle?
An experienced financial advisory team should offer a comprehensive financial plan analyzing the changes in your cash flows from assets received, alimony, changes in expenses, and other cash flows expected after the dissolution of marriage. By providing a comprehensive overview of the following factors, an advisor can help you balance your projected expenses while maintaining the lifestyle you seek:
• Cash flow planning for income and expenses
• Alimony/child support
• Asset sustainability study and portfolio risk analysis
• Tax situation review and appropriate planning
4. Have you reviewed your estate planning documents to make necessary changes?
An experienced financial advisory team can help you review all your important estate planning documents and be confident you are providing for your chosen heirs, updating your beneficiary designations, and naming new designees for your healthcare and power of attorney documents. Documents to consider include:
• Will and trusts
• Power of attorney and healthcare directive
• Retirement accounts and plans
• Jointly named real estate and financial accounts
• Authorizations to access digital accounts, including financial accounts, email accounts, social media accounts, etc.
5. Do you have a fiduciary you can trust to oversee your trusts and assets?
When trusts are utilized to protect settlement payments, it is important to select a trustee who will be your fiduciary: A trustee whose first and foremost responsibility is to protect your best interests and those of your family.
6. Is there a business valuation involved in your settlement agreement?
The preparation of a business valuation is a lengthy and expensive process. Valuation reports can exceed one hundred pages in length and can be very difficult for even seasoned professionals to understand. For any business that has been appraised as part of the settlement process, can your advisor review the appraiser’s valuation report and provide insights that may answer questions such as:
• Is the appraiser a qualified professional with experience and valuation credentials?
• Is the appraiser’s financial analysis of the company thorough and explained?
• Are the methods used appropriate and the reasons for their selection discussed?
• Is the value conclusion reasonable, based on the factors presented in the report?
7. Do you have the tools to set your short- and long-term investment strategies?
If you’re receiving a settlement, you want to be certain that your short- and long-term needs are met through the creation of a customized investment portfolio. It will be important to have a dedicated financial advisory team that can tailor a portfolio based on your specific parameters, including liquidity and spending needs, time horizon, risk tolerance, cost sensitivity, tax efficiency, and other factors.
8. Do you need to update your insurance coverage?
In divorce situations, insurance review is very important to be certain you have the appropriate coverage, you or your ex-spouse have named the correct beneficiaries, and that the premiums are being paid. Health, life, disability, property & casualty, and long-term care insurance should all be reviewed to identify what actions might be recommended, including revising policy ownership and beneficiary designations, and understanding who has responsibility for premium payments.
9. Are your children’s college expenses covered?
Your advisory team can establish projections and analytics helpful to the settlement process by delineating the future costs of college based on the ages of the children and the potential colleges under consideration. This data can be coupled with merit-based aid scholarship strategies and other financial aid analytics. Often, trusts can be designed and created specifically (or in concert with other goals) to fund education.
10. Are you aware of the charitable techniques available to you?
Your advisor should review any existing private foundations and charitable trusts to be certain they are still in line with your goals and wishes. Your advisor can also review potential charitable techniques that could be utilized to support philanthropy and minimize taxes in the settlement process.
Wilmington Trust’s core objective, dating back over a century, is to serve families. We can help parse through complexity and manage, grow, and protect wealth. In offering a broad spectrum of wealth advisory services, delivered through a dedicated team, our guiding philosophy is clear: It is our clients’ best interests that drives us. We can help you navigate the challenges you face today and prepare you for a new beginning and a successful future. To learn more about divorce insights, access this link.
Sharon L. Klein is president of Family Wealth, Eastern U.S. Region, for Wilmington Trust. She is responsible for coordinating the delivery of all Wealth Management services by teams of professionals, including planning, trust, investment management, family governance and education, family office, and private banking services, to high-net-worth clients in the Eastern United States. Sharon also heads Wilmington Trust’s National Matrimonial Advisory Solutions Group, a team of Wilmington’s professionals from across disciplines who collaborate with family law practitioners in offering a comprehensive set of services for those considering or maneuvering through a divorce.
Beginning her career as a trusts and estates attorney, Sharon has over 25 years’ experience in the wealth advisory arena and is a nationally recognized speaker and author. She is a Fellow of the American College of Trust and Estate Counsel. She chairs the Domestic Relations Committee of Trusts & Estates magazine, where she sits on the Board and is a member of the New York City Bar Association’s Matrimonial Committee.
This article is for general information only and is not intended as an offer or solicitation for the sale of any financial product, service or other professional advice. Wilmington Trust does not provide tax, legal or accounting advice. Professional advice always requires consideration of individual circumstances. Wilmington Trust is a registered service mark. Wilmington Trust is a wholly-owned subsidiary of M&T Bank Corporation (M&T). Wilmington Trust traces its roots to the founding of Wilmington Trust Company in 1903.