Get Financial Advice Before Your Divorce

Such advisers know the ins and outs of dividing pensions, retirement benefits, 401(k) assets, community property, savings, and health insurance, as well as future earnings and Social Security benefits. How the parties emerge from the financial settlement can affect lifestyle, from living arrangements to current and future employment and whether to retire or keep working.

Amy Colton, a financial adviser for 13 years, says she earned her CDFA to help women in “major life transitions, such as going through a death, divorce or sudden inheritance.”

“I wanted to make sure I took care of people going through those very emotional times who need a lot of hand-holding and need a lot of guidance,” says Colton, who’s also a Registered Social Security Analyst.

Among her clients in Arizona, California, Florida and Texas, most are dissolving marriages after a couple of decades, with 80 percent of her clients over age 50. One couple is divorcing after 40 years. Such agreements usually take three months, but she says some take as long as six months.

“If they haven’t accumulated anything, they probably don’t need someone like me or an attorney,” Colton says. “The house is usually the biggest asset. It benefits them to use someone like myself because I don’t charge hourly. I can get it done quicker. I can work with both parties, which attorneys can’t do.”

Smith says her career was inspired by her divorced single mom’s financial challenges.

“I grew up with it and experientially know how important ownership of your finances is,” she says.

“I’ve had a lot of divorcing or divorced women walk into my office with very large divorce settlements, and a lot were very fuzzy on the details. They were giving the divorce attorney the power,” Smith says. “It all comes down to the concept of literacy.”

Divorce and financial literacy

That’s one reason she launched a financial literacy platform in 2019 called Wife2CFO for divorced women or those going through divorce.

Divorced women fare worse economically than divorced men following the end of a long marriage. A 2021 study in The Journals of Gerontology: Series B found that women experienced a 45 percent decline in their standard of living compared with the men’s standard, which dropped by 21 percent.

The study, coauthored by sociologist Susan Brown, of Bowling Green State University in Bowling Green, Ohio, also found that these “negative economic outcomes associated with gray divorce persisted over time, indicating that gray divorce operates as a chronic economic strain.”

For women who have left the workforce to care for children or scaled back to a part-time job, the consequences of not paying into Social Security may leave them in a financial bind, says Jocelyn Elise Crowley, a professor of public policy at Rutgers University in New Brunswick, New Jersey.

“For every year a woman is at home taking care of their kids, Social Security puts in a zero. For their final yearly benefits, women receive thousands of dollars less in Social Security than men,” she says.

Social Security does permit some divorced individuals to be eligible for half of the ex-spouse’s benefits under certain conditions, including being married for at least 10 years.

Cashatt, Colton and Smith agree they’re now seeing more clients in which the wife earns as much or more than her husband or is the sole wage earner.

It doesn’t always work

Obstetrician Dafna Trites, of Tarzana, California, is hoping her divorce will be finalized by this summer. Trites, 57, was married 20 years before the couple separated in November 2018. He filed for spousal support in May 2020, and she says she responded with divorce proceedings as well.

“Because the proceedings of the divorce were going so badly and we were not getting anywhere, I was referred by a friend of a friend to try this way,” says Trites, who wasn’t aware of the divorce financial specialty. “We were already a year and a half into attorneys’ fees for both of us.”

“This seemed like such a great fit because it was someone acting in an impartial manner trying to get information financially from both of us to a cohesive, understandable format to look at it and figure out who owes who,” she says. “Unfortunately, in my case, it didn’t work.”

After seven months, they couldn’t come up with an agreement.

“It takes both spouses to give the full picture of their financial information. Until you have a full picture, you can’t get anywhere,” Trites says. “It has to involve two people willing to give all their information and get to a solution. It can’t be a one-sided situation.”