Divorce Checklist & Financial Solutions for High-Net-Worth Marriages - Adviser Investments

Divorce Checklist & Financial Solutions for High-Net-Worth Marriages

June 28, 2022
Image of two people and a lawyer signing divorce papers.

The divorce process can be emotionally and financially daunting, especially after a long marriage. The more time you and your spouse have been together, the more assets and debt you’ve likely accumulated. Our divorce checklist provides financial solutions and steps to help you untangle yourself financially from your spouse and reestablish your financial independence.

Consult With a Certified Divorce Financial Analyst® Practitioner

For high-asset divorces, it’s critical to consult with a Certified Divorce Financial Analyst.

Trained in the field of pre-divorce financial planning, a CDFA® practitioner possesses the knowledge to help you value and divide your assets, such as retirement assets, pensions and splitting the family home.

A CDFA® practitioner also helps you navigate challenging divorce tax complications and can provide expert witness testimony.

Tip: For straightforward financial advice from our experts, subscribe to The Adviser You Can Talk To Podcast. Also, receive bi-weekly market trends and analysis of critical investment topics via your inbox when you sign up for our Adviser Fund Update newsletter.

Document Assets, Expenses and Income

As soon as you sense divorce on the horizon, start tracking of your household income and expenses. You’ll need it for your lawyer and, eventually, the judge who’ll be determining how to fairly divvy up assets and debts, as well as any child or spousal support payments.

Compile the following:

Anticipated Inheritances

Business Ownership

Employment Contracts

Childcare Expenses

Credit Card Statements

Outstanding Financial Obligations List

Pay Stubs

Property Deeds

Income Taxes (3 years)

Insurance Policies & Annuities

Motor Vehicle Titles

Personal Identity Documents (e.g., passport, Social Security card, birth certificate.)

Debt (e.g., auto, boat, education, mortgages, home equity loans, etc.)

Assets and Locations (e.g., checking, retirement, pension and savings accounts. Also, alternative investments like antiques and collectibles.)

Health Insurance Details (You may need to contact your spouse’s benefits coordinator to discuss continued health coverage, including COBRA. Not all states allow divorced spouses to continue with the employee’s health plan.)

Inventory Household Items and Safe Deposit Boxes (in-home and at banks)

Special Expenses (e.g., special needs child, aging parents, adult child addiction, animal care, etc.)

Tip: For more divorce financial tips, read our post: Dealing With Divorce—Taking the First Financial Steps

Establish Credit & Separate Finances

Unless you’re experiencing an amicable divorce and you and your spouse are in agreement about splitting assets, it’s important to speak with a divorce attorney before moving assets and closing financial accounts. In general, close all joint accounts, including banking and credit cards. Remember, you’re liable for any debt held jointly.

Simultaneously, apply for an individual credit card, especially if you need to build credit.

Manage Taxes

High-net-worth divorces create complex tax matters, given the extensive assets involved.

Issues commonly arise around multiple real estate properties or different forms of income like executive pay benefits, including equity compensation, nonqualified deferred compensation, company perks like special memberships, bonuses and the like.

For executive pay, dividing assets and tax responsibilities isn’t clear cut; an executive incentive bonus could be earned during the marriage, but paid out after the divorce.

Prepare for the following tax impact to be shared with your spouse:

Capital gains from real estate sales

Carryforwards and Credits (e.g., carrying over deductions for future tax years like a charitable contribution or a business operating loss)

Retirement/Pensions (asset transfer between spouses during divorce is considered a nontaxable event). Still, there are different “transfer” approaches in order to avoid unnecessary tax liabilities. For example, a spouse may roll over the distribution from a qualified retirement account using a Qualified Domestic Relations Order tax-free. But for IRAs, you must treat these funds as a Transfer Incident.

Maximize Social Security Benefits

Divorced spouses who have been married for at least 10 years may be eligible to receive Social Security benefits based on one spouse’s higher earnings, plus survivor benefits if your ex-spouse dies. If you’re just a handful of months away from the decade mark of your marriage, it pays to hold on for just a bit longer if possible.

Update Estate-Planning Documents

Once your initial separation is legal, update your estate-planning documents, including: Last Will and Testament, Medical Power of Attorney, Living Trust and Durable Power of Attorney.

Also, update your primary beneficiaries, the executor of your estate and trustees.

The Medical Power of Attorney should be updated right away, since you probably don’t want your ex-spouse making medical decisions on your behalf.

Keep in mind, some divorce agreements require naming specific primary beneficiaries for assets acquired during the marriage, e.g., your minor children named as beneficiaries on your retirement accounts (possibly excluding a future second wife or another child from a second marriage), and your ex-spouse named on your life insurance policies.

For more detailed estate planning strategies, read our post Estate-Planning Checklist: Must-Haves Before You Die.

Next Steps

Our divorce checklist and financial solutions are intended as a starting point. We also encourage you to consult with an experienced divorce attorney. (We’ve worked with many divorce attorneys over the years and are happy to make an introduction for you.)

Related Podcast

Divorce is not the end – It’s a new beginning

Our financial planners discuss their experiences helping clients navigate the challenges of divorce and adjust to new financial realities during our podcast: Dealing With Divorce—How to Financially Survive (and Thrive).

This practical, wide-ranging conversation uses real-world examples to shed light on three focal themes, including having a budget and asking yourself: What do I own and how do I protect myself and my family?

If you’re a breadwinner, co-breadwinner or non-earner in the throes of a high-net-worth divorce and need help navigating the financial complexities, contact Adviser Investments anytime for assistance. We pride ourselves on being The Planner You Can Talk To.


Tax and legal information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice.  Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice. Always consult a licensed attorney or tax professional regarding your specific legal or tax situation.

Our statements and opinions are subject to change without notice.  All investments carry risk of loss and there is no guarantee that investment objectives will be achieved.

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