Reinventing your lifestyle after divorce
Divorces can be amicable or not. Planned well or not. Regardless of how the proceedings play out, life changes for both parties in many ways. It’s time for both of you to revisit every aspect of your financial plan and make the adjustments needed to protect yourself, your future, and your loved ones.
In an ideal world, couples have the time and willingness to anticipate the changes that will take place after a divorce. In reality, a lot of questions will be unanswered in the aftermath of separation and they should be addressed as soon as possible to avoid potential conflicts. Here are three of the most immediate revisions that need to be made to a financial plan immediately after a divorce.
Reorganizing your assets
The assets you shared as a couple may have included a principal residence, a vacation property, shares in a business or partnership, and perhaps other non-cash assets such as artwork, a boat or vehicles. It’s not uncommon for those assets to be sold off for convenience and turned into cash.
This means, you may have just as much net worth as you did before your divorce, meaning half of your shared wealth, but the asset mix has changed entirely. For example, half of a principal residence is not the same as your share of the money from its sale. Cash needs to be invested differently if your goal is to replace the long-term security of owning real estate.
Restructuring your expenses
A combined income may have made some lifestyle choices seem more affordable before the divorce. Keeping up with your previous lifestyle requires a new financial plan that may have to rely more heavily on income-generating investments if you want to travel or maintain memberships and charitable commitments. If you plan to purchase a home, long-term, low-interest financing may be needed and that decision has to be balanced with your new cash-flow reality.
Divorce is always complicated. It gets very complicated when one spouse remarries, possibly resulting in a new blended family, and sending everyone to revisit their lists of beneficiaries, successors, and heirs. This is potentially one of the most emotional aspects of rebuilding a financial plan. It’s a time for coaching and counseling to ensure that decisions are made for the right reasons, with a clear head and an open heart.
Start fresh in the right direction
Regardless of the emotional consequences of divorce, there is no reason why you can’t rebuild your finances, reinvent your financial plan, and start following a new path that maintains the best parts of your current lifestyle. You just need to make a plan built with the objective advice of an experienced wealth management team.