During your divorce you have a lot to think about. You are planning for and managing all of the moving parts in real time. Your primary goal is to just get through the process so you can breath again. Reviewing the beneficiaries listed on your various accounts, and across your investment portfolio, is one of the last things that usually comes to mind for people who are going through a divorce. Yet, this is one of those things to ‘put on your list of things to do’ so you don’t have any regrets.
Word to the wise. If you go down this path and reevaluate who should be your beneficiaries we recommend to take a step back and rethink how you want to ‘design’ your beneficiaries. Think about whether your beneficiaries should be made up of individual(s), trust(s) or both. If you wonder whether the monies you leave behind will be used the way you intended then a trust might be a better solution for you. Although we are not attorneys, we raise issues to make people think about what they truly want and need. We focus on bringing issues to the table that may be left off the table and can potentially hurt you later on.
Through a trust you can gain more control over how monies are directed, when they are released to your beneficiaries, whether certain trigger events must occur before the monies are distributed, among other benefits. You can design your trust pretty much any way you want so you are comfortable with how things will be handled.
For instance you may have a trust solely designed to fund your children’s education. In this situation the monies remain invested until your child reaches a certain age. In fact you can design your trust to release the monies when they are needed. A trust may be used to pay for the down payment of a new home or be a safe haven for a medical situation that you know one of your beneficiaries might encounter based on your family history. You can let the monies accumulate in the trust through the investment vehicles you choose. You would have a trustee who could modify your investment selections with your permission as defined in your trust.
You can create a trust to do almost anything as long as you remain within the confines of the law. If you want to implement a trust contact an estate planning attorney. The estate planner will help you define your goals and design the trust in such a way that will allow the monies to be used according to your wishes.
Having a trust as one of your beneficiaries does not mean you should exclude your children from being beneficiaries on your accounts. You may decide a certain portion of your monies can be released immediately with no control over how the monies are used. In this situation you would simply list your children’s names as beneficiaries. You would also determine what percentage of the monies go to each child vs. the trust. In other words, your children would be listed as beneficiaries and the trust would be a beneficiary too. Just allocate the 100% across all of your beneficiaries to achieve your desired outcomes.
Given the importance of this topic, let’s put “review your beneficiaries” on your list of things to do. Send an email to your advisor and let them lead you down the path to make sure this gets done for you. If you want feel free to send this article to them as reference.
Changing your beneficiaries is a relatively simply thing to do for you and for your advisors. Yes, there is some paperwork involved. I know you are probably saying no more paperwork at this point in time. But, if you know you are heading toward a new life for you and your family, then this step will be very important for you to get done.
About the Author
Larry Smith is a Founding Partner of Divorce Outcomes, a specialized professional services firm that manages all of the financial aspects in a divorce process. Since 2003 he has worked as a trusted financial advisor, financial advocate, divorce architect and technical financial expert; he is not an attorney. He is an alumni of KPMG and Andersen with expertise in technical accounting, forensics, sophisticated taxation, management consulting, risk management, advanced process engineering, business combinations, divorce management, multi-party negotiations, advanced quality analytics and cognitive performance technologies. Since 1986 Larry has been advising individuals and organizations about innovative financial solutions to resolve complex financial challenges that arise in life and in business.
For both personal and business divorces, Larry is considered an expert in divorce strategies, divorce process management, financial divorce architecture, financial risk management, taxation for divorces, financial divorce forensics, advanced divorce analytics, financial divorce negotiations and mediation, business valuations and sophisticated equity structures. He helps clients shape complex financial decisions, manage communication risks and ever-changing negotiating positions to strategically preserve or grow wealth from these types of transactions.
If You Have a Question
If you have a question, feel free to contact me at [email protected] or 617-680-5222. The call is free. I will spend 30–60 minutes with you. I will provide you an honest assessment as to where I think you are positioned in your divorce process or answer any questions you have. I may provide you some guidance, insight or advice that you can take with you as you wish. There is no obligation to move forward. The phone call is designed to ease your fears, provide you some options to pursue and a potential road to run on that can lead you down a path to achieve a successful outcome.
About Divorce Outcomes
Divorce Outcomes is a specialty services firm that helps people both domestically and internationally manage all of the financial decisions that arise in their divorce process. We are not attorneys. We are financial experts who partner with our clients as their personal financial advocates. We help our clients manage their divorce process, uncover hidden financial risks, architect divorce solutions, manage ever-changing negotiating positions, communicate complex financial matters and close the divorce process as soon as possible with a goal to arrive at the best outcomes possible. Throughout the process we evaluate the current state of our clients’ financial lives with an objective to best reposition their future. We do not sell any products. We simply raise issues that are in our clients best interest. Our clients share with us we:
- unfold, analyze and repackage their financial life so they are well positioned after their divorce
- preserve the value of their business or marital estate
- continuously strive to provide a return on our services
- build balanced financial solutions grounded in evidence
- find ways to make our client, and at times both parties, money through the process
- design their divorce to work for them and their family’s life
- provide mental clarity to make decisions
- reduce the total process time from start to close
- minimize the stress and unpleasant memories that can last a lifetime
As we reach an agreed upon settlement structure, we help our clients identify a fitting attorney who can leverage the financial solution to draft and record the requisite legal documents. Where outcomes are at risk from a traditional process, we function as expert financial negotiators or financial mediators to turn around the situation and achieve our client’s desired outcomes.
Learn more about us at divorceoutcomes.com or review our blogs to gain a clearer understanding about our approach and how we maximize the financial outcomes for our clients.
This communication is for general informational purposes only which may or may not reflect the most current developments. It is not intended to constitute formal advice or a recommended course of action as every person’s situation is unique and different. The information here is not intended to be, and should not be, relied upon by the recipient to make a decision without professional guidance.