Gerstein Fisher | Managing a divorce

Managing a divorce

As she began the process of filing for divorce, Fran* consulted us for guidance in several areas. Her major concern was obtaining an equitable settlement, including alimony, child support, and education funding for her two children. In addition, she recognized that she would need assistance with investment planning, insurance and tax issues, and with the creation of a financial support system for herself when the divorce was final.

We sat down with Fran to calculate the total assets she held with her husband and made plans to track down any missing financial information such as tax returns, benefits statements, wills, mortgages, insurance policies, or investment accounts that would be relevant to determining the couple's total financial picture. Following a thorough analysis of the data, we met with Fran's attorney and accountant to structure a favorable lump-sum payment.

Because alimony is treated as taxable income for the recipient, we suggested an agreement that weighted the husband's payments more heavily toward child support, which is not taxable. We also explored several options for college savings, including 529 plans, U.S. savings bonds, and Education IRAs (also known as Coverdell Education Savings Accounts).

After examining Fran's insurance policies, we uncovered a need for several adjustments, including changing the beneficiary designation to her children from her husband, as well as an increase in coverage and the possible purchase of a disability policy. Fran's health insurance (currently provided through her husband's employer) would be continuous through COBRA for 36 months, during which time we agreed to investigate new policies for her. We also discussed with Fran raising her deductibles on property and casualty insurance to offset the higher cost of extra life and disability insurance. This led us to a more general discussion about the budget—backed up by a solid emergency fund—that we would establish for Fran.

With our help, Fran went into her divorce proceedings with a solid grasp on what her financial future would look like on the other side and a solid, actionable plan to achieve her objectives on her own.

* Names and some details have been changed to protect client confidentiality. Your particular situation can differ based on your unique needs and objectives.

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