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When Should Financial Planning Include Divorce Planning?

Whether you are single, married, separated or divorced, financial planning is always a must. Whether you live in Howard County or elsewhere throughout the State of Maryland, financial planning is a reality for all of us.

Let's first take a step back and talk about what financial planning is, and who financial planners are. Financial planners can be accountants, CPAs, investment advisors, wealth management teams and far more.

The work they do depends on your stage of life. A young professional may have far different needs than a baby boomer, of course.

So, how does divorce planning fit into financial planning? Again, it depends on your stage of life. Let's go through several examples.

The young professional-You are single, earning income and beginning to acquire assets. It might be a home. It might be a retirement account. It could be more, or less. At your stage of life, once you find your someone special, the topic is how to protect your wealth. It could be through a pre-nuptial agreement. There are other devices, as well.

The newly married couple-You are now together. Have you spoken with each other about how to handle your finances, as well as your debts? Is it "what's mine is yours?" Is it something different? This warrants a long honest conversation with each other.

Together but not married-This becomes a bit more difficult. It is highly popular to be together but not marry, with or without children. Absent a written agreement, your assets and debts will go by title. If you purchase a home together, that can become a quagmire without a thoroughly thought out plan, usually accompanied by a documents.

Married with kids-This is the traditional model, which is what most of us think about. The need for divorce planning within financial planning could arise if one of you is not happy in the marriage, if one spouse is not financially responsible, or for many other reasons. Seeking options is important. It could lead to an honest conversation between the two of you. It could lead to the creation of a new plan, even a formal agreement, called a Post-Nuptial Agreement. It could also speed along the process towards divorce.

Whatever your circumstance, just remember that life is not a dress rehearsal. A conversation about financial health is important at every age and step throughout your life. The worse mistake you can ever make is to simply ignore financial reality.

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