Navigating clients through divorce

Key Takeaways:

• According to recent statistics, around 40-50% of marriages end in divorce—it’s likely something you see frequently in your practice.
• Understanding how to support your clients during this transition can make all the difference in helping them move forward with confidence.
• Gray divorce is on the rise; we’re seeing a trend of couples over 50 choosing to end their marriages.

03/20/2025 – We all probably know someone who’s been through a divorce—it impacts millions of people each year, and according to recent statistics, around 40-50% of marriages end in divorce. And divorce isn’t just emotionally challenging—it can also bring about significant financial complexities. Helping a client through a divorce can feel overwhelming, but it’s one of the most important times to provide steady, informed guidance. Understanding how to support your clients during this transition can make all the difference in helping them move forward with confidence.

Before the Divorce

Take stock of financial goals and assets

Before starting the process, it's important to get a clear picture of your client's finances. You can start by revisiting their whole financial picture by analyzing bank statements, investments portfolios, retirement accounts, and other debts or liabilities and determining their net worth. Talk with them about their financial goals for after the divorce, as these will play a key role in dividing assets and planning.

Build a Support Team

Advise your clients on the importance of assembling a team of professionals, including a divorce attorney, therapist, and potentially a mediator, in addition to your financial planning advice. A divorce attorney provides legal guidance and ensures the client’s rights are protected throughout negotiations or court proceedings. A therapist supports emotional well-being, helping clients manage stress, grief, and other challenges associated with the divorce. A mediator can help facilitate productive communication and agreements, potentially saving time and reducing conflict. Every professional has an important part to play, making sure nothing important gets missed along the way, and a holistic divorce process will only benefit your client in the long-run.

Budget Planning

We all know budgeting is important, and when a big life change such as a separation or divorce occurs, it’s a good time to for clients to reevaluate spending and create a new budget to reflect their new reality. It’s not just about crunching numbers—it’s about taking a moment to lay the groundwork for their financial stability and peace of mind. A good budget also anticipates the future. Are there any big expenses on the horizon they need to prepare for, like education costs or retirement planning? This process isn’t just about cutting back—it's about understanding what adjustments they need to make to feel secure and in control. It’s also a helpful tool during property settlements and negotiations, as it gives a realistic perspective on what your client can manage in the long term. You can also remind your client that it’s okay to tweak things as you go. The goal is to create something that works for them and helps them move forward confidently, even when things might feel uncertain.

During the Divorce

Asset Division and Tax Implications

During divorce negotiations, asset division can be a contentious issue. Provide clients with detailed analyses of proposed settlements and their tax implications. For instance, transferring certain assets like retirement accounts can trigger tax consequences, while alimony payments may have additional implications under tax laws. And taxes will vary by state. Make sure to educate your clients on how different asset divisions could affect their financial health long-term and consult a tax professional for a holistic approach.

Refinancing and Credit Management

This may also be the time to discuss the potential need for refinancing certain assets, such as a family home if one spouse decides to keep it. Additionally, you’ll want to encourage clients to monitor their credit throughout the divorce process. Safeguarding and maintaining credit scores are vital, especially if they need to secure housing or additional financing post-divorce.

Open Communication

Throughout the divorce, you can go above and beyond for your clients by helping keep up communication between all parties involved in the divorce. You can encourage them to express their financial priorities and concerns openly with their attorney and any financial mediators, as advised, and continue to reach out to others in their support team. Clear communication can prevent misunderstandings that could lead to unfair settlements or prolonged negotiations and just generally bring your clients peace of mind.

After the Divorce

Updating Estate Plans and Accounts

Once the divorce is finalized, it’s crucial to update estate plans and beneficiary designations to reflect the client's new marital status. Though their definition of “family” may have changed, the need to protect their loved ones remains the same. Make sure to update your client's will, trusts, life insurance policies, and retirement accounts accordingly. This avoids unintended beneficiaries and ensures that the client’s wishes align with their new circumstances.

Long-Term Financial Planning

Post-divorce, you can help clients shift their focus from the immediate to the long-term financial implications of their divorce by revising financial plans that encompass retirement savings, investments, and education funds for children, if applicable. You can help them reassess risk appetite and asset allocations to reflect their new life and financial goals.

Emotional Readiness and Financial Wellness

Finally, support your clients in achieving emotional readiness as they embark on this new chapter of their lives. Financial wellness is not just about numbers; it’s about empowering clients to feel secure and confident in their financial future. You can provide additional resources or recommend workshops that help rebuild their financial confidence and literacy post-divorce.

Moving forward

As a financial professional, you play a key role in helping clients navigate the tricky financial aspects of divorce. By providing them with the right knowledge, personalized advice and support, you’re not just helping them deal with the present but also setting them up for a more secure future. Your guidance can make a huge difference, easing the financial and emotional stress of divorce and helping them move forward with confidence.