Untangling Finances: 7 Steps to Understanding and Organizing Your Assets Before Divorce

Guest Blog written by Brianna Beski, financial advisor and CDFA

So you are embarking on a divorce journey- I’m sorry my friend (or congratulations- depending on your situation).

When you are at this point a best practice is to take a long hard look at your financial picture. This will be an actionable guide to get a good understanding of your finances and assets as well as organize yourself in preparation of the divorce process.

Here are the 7 steps we are focusing on in this article:

1. Find and make copies of your financial documents

2. Create a detailed asset Inventory

3. Identify digital assets and intellectual property

4. List your debts and liabilities

5. Make sure you have an up to date business valuation

6. Explore Ownership Structures

7. Assess Professional Guidance Needed

Step 1: Find and make copies of your financial documents

Do you have a smart phone? It’s a great tool many people have at their finger tips- you can now take pictures of documents or use an app to scan documents into a PDF.

Now that your have an option to make copies, what documents do you need?

Best practice (married or not) is to have a copy of your:

• Drivers license Passport

• Credit Cards

• Health Insurance Cards

• Documents that you will need to have copies of: Bank Statements and Credit Card

• Statements Tax Returns

• Investment Portfolios

• Loan Agreements

Why do you need these? The short answer is these documents are imperative to help provide a clear financial snapshot, and also help for informed decision making during divorce proceedings.

Step 2: Create a detailed asset inventory

After you have copies of financial documents, start putting together a detailed list of all of your assets. Include real estate, investments, retirement accounts, business holdings and other personal property (art, furniture, collectibles).

This will serve as your foundation for a fair and transparent asset division.

Step 3: Identify digital assets and intellectual property

Both digital assets and intellectual property tend to be overlooked (airline points, vacation days and Paid Time Off are other ones too) and can have a great deal of value.

The types of assets to think about are

• domains

• trademarks

• copyrighted works

• Cryptocurrency

• NFTs or other digital tokens

It’s important to identify and locate these pieces of property and make sure they are addressed during the divorce proceedings.

Step 4: List your debts and liabilities

This step is really important. A thorough examination of financial obligations will ensure a fair, balanced and fully informed distribution of BOTH assets and liabilities.

If you are not sure where to start, think about:

• mortgages

• Student loans

• Credit card balances

• Car loans

At this point I want to stress: Regardless of your asset/debt balances, these actions are to inform yourself (not judge yourself). Knowledge is power, and you need it.

Step 5: Make sure you get an up to date business valuation

Do you or your partner own a business? If not, skip this step. If so- IT IS REALLY IMPORTANT to start the process of getting a business valuation that is accurate. In my experience bringing in experts who can appropriately value your business have provided exponential value towards an equitable distribution.

Step 6: Explore Ownership Structures

Ownership structure makes a difference with regards to splitting the assets and it is important to understand the division.

Did you know there are types of property like Separate Property and Marital Property? Feel free to reference the blog I wrote about this in detail and the blog about division of assets.

The very short story is Separate property is typically what you have owned prior to the marriage and is titled with you or your spouse as the only owner. Marital property typically was acquired during the marriage and is often titled jointly.

How everything gets divided depends on details like:

• Whether you are in an equitable distribution state or community property state?

• How long was the marriage?

• What are spouses age, physical and emotional health?

• What was brought into the marriage from each spouse (think income and property)?

• What was the couples standard of living?

• Was there a prenuptial or postnuptial agreement?

• What is each spouse’s income and ability to earn?

• Did either spouse contribute to acquiring, keeping or improving marital property?

• Did either spouse delay pursuing a career in order to care for children or support the other spouse?

• Did either spouse contribute to the other spouse’s education or earning power of the spouse?

• What are the tax consequences of the proposed property division?

• What are each spouses debts and liabilities?

There are more to be aware of, but these are common factors.

Step 7: Assess Professional Guidance Needed

Divorce is complicated, you don’t need to go it alone. There are a variety of resources that provide value and you can utilize. Here are the most common:

• Family Law Attorneys: These people are experts in the laws in their local community. If you have a specific question or situation attorneys can relate your situation to the local laws, and case history. This is a great place to start, by asking for a consultation and interviewing them to determine if the attorney is a good fit for you and your situation.

• Certified Divorce Financial Analysts (CDFA): These people are able to provide support and guidance in organizing assets and liabilities, be knowledgeable on tax consequences, and provide clarity on different settlement options as well as projecting financial strategies through retirement. When you have a consultation, interview and see if they are a fit for you and your situation

• Certified Divorce Real Estate Experts (CDRE): These people are able to provide support in appropriately valuing your property, and acting as a neutral in the sale of a real estate property. Determining an appropriate valuation for real estate property is important for division of assets, some of the CDREs are able to be an expert witness and testify to their valuation reports. Also in acting as a neutral in the sale of property, they are bound by certain ethical requirements.

• Therapist: There is a lot that happens in the course of divorce- these people can help with the emotional side of the process (which is meaningful). All of the above listed professionals tend to be empathetic but are not trained to address or help the emotional side. Do yourself a favor and interview therapists to see if they’d are a fit for you and your situation.

Consider getting a financial plan to demystify the financial side of the divorce process.

By bringing in professionals that can provide strategic insights and navigate the complexities of divorce, you are ensuring YOUR divorce process is fair and well informed.

Remember: This is Your Divorce- take an active role and be proactive.

By having a thorough understanding of your financial situation, you are setting yourself up for a smoother divorce process. Create copies of financial documents to organize yourself for the process. Identify assets (including commonly overlooked ones) as well as debts to lay the foundation for an equitable division of assets. Ensure you have a current business valuation to make sure that asset is being fairly valued and divided. Get familiar with what is marital vs separate property in your situation. Also, professional guidance can be key to ensuring every aspect of your financial picture is thoughtfully considered and addressed.

Brianna Beski is a financial advisor and CDFA at Raymond James, based in Colorado. She and her team focuses on helping people navigate transitions in life and secure their financial futures. For the rest of the story, please visit her website or email her at brianna.beski@raymondjames.com.

While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJA, we do not render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Brianna Beski of Raymond James Branch 3BA and not necessarily those of Raymond James or Raymond James Financial Service.

Raymond James & Associates, Inc., member New York Stock Exchange/SIPC