Many people who are either thinking about getting a divorce or are actively going through one do not realize their wealth can become at greater risk based on a number of factors such as:

  • The process (or lack of capabilities) they decide to unknowingly use as their divorce process
  • How they think about wealth; wealth is more than the assets in a portfolio
  • Whether or not they engage the right skills at the right points in time in their process
  • How they think about their settlement structure and whether they are clear how one option over another will impact their future wealth position
  • Any pre-ordained mental models they bring to the process about how divorce is “supposed to work”
  • The style of communication they choose to utilize throughout their divorce process with their advisors and their soon to be ex-spouse
  • The type of information shared, and how it is presented, at certain points in time in the process with their spouse
  • How they arrive at an informed decision in their own mind
  • The terms used (or lack thereof) in their divorce decree

Read on and we will explain some of these topics further.

Wealth at risk does not only represent the assets in your investment portfolio

Wealth at risk also hides in your mutually, agreed-upon:

  • commitments you assume from your divorce
  • income transferred to your spouse up front or over time (not retained by you)
  • expenses you incur that drain your opportunity to create wealth for you, your children and your future

Couples often do not know what they do not know. Issues hide in your negotiations as they are never raised or not put on the table for discussion. They are discovered much later in life after the divorce is finalized.

All 4 categories of assets, commitments, income and expenses have to be managed together. There are usually hidden assets, hidden commitments, hidden income and hidden expenses people do not think about as they are negotiating. They arise at a later point in your life where you wonder why weren’t these addressed during my divorce. The list can be sizable as it encompasses financial transactions or agreements you have experienced in your past or will experience in the future. When you look at someone’s personal balance sheet, which is not often compiled, it usually comprises 10-20 line items for most people. We have identified over 700 potential line items that could pose wealth at risk to you and your life. No one would ever populate all 700 items. Yet, these line items function as a checklist to make sure you are not leaving anything on the table, financially speaking, that you might regret later on. You only need 1 of the 700 to find a way to preserve your wealth or create wealth for you and your future.

If you believe your assets should be divided 50/50, you’ve placed your wealth at risk

It’s usually a big surprise for people to realize that they are negotiating against themselves. How so? It is all about how you think about your divorce. If you believe you have to divide your assets 50/50, regardless of what the laws say that govern your state or province, you will find yourself placing your current and future wealth at risk. Why? A divorce is truly a negotiation. You can design the outcomes of your divorce in any way you want with your spouse as long as you do not incorporate anything that will commit a crime or hurt anyone else in the process. The legal system comes into play if you have to go to court. Otherwise, how you design your divorce is up to you and your spouse.

The key to manage your wealth at risk is to:

  • Remain in control of all of your decisions
  • Do not outsource your decisions to other advisors or let them control your outcomes; keep 100% of the decision making authority in your hands
  • Do not end up in court where the judge will ultimately decide the fate of your current and future wealth

There are many approaches to divide up your marital estate and negotiate your outcomes. Yet, this is beyond the scope of this article.

How you communicate with your spouse can place your future wealth at risk

The tone you set up front will set the impression you create inside your spouse’s mind. This impression will be ever-present during the rest of your divorce proceeding. If you are unkind in any way your spouse will remember your style of communication and will likely hold it against you. This translates into getting more of your marital estate in your spouse’s pocket vs. yours. If you, or your advisor, communicates in a nasty tone you can expect the depth with which your spouse will go to capture the wealth from your marital estate will be deeper than you might expect. If you keep your feelings in check, at least during your divorce proceeding, you will find you will be able to move more of the wealth into your pocket. 

Word to the wise: Be careful of an advisor who:

  • Uses inflammatory words in writing
  • Dig up information for digging sake but do not capture information or create situations that do not help you arrive at your desired outcomes

These actions will create strained communications and hurt you financially in the long run. If you find yourself in a compromised situation, you be in need of what we refer to as a divorce rescue service which involves unseating your current negotiating position and repositioning it to achieve your desired outcomes. There were likely many steps in the process you unknowingly missed along the way that placed you in a compromised spot. 

Although the communications may come from your advisor your spouse will receive the communications as if they came from you. Ultimately, you are responsible how your advisor communicates with your spouse. You need to review all communications before they happen so you can manage the impact they have on your spouse’s mind and how they will influence (positively or negatively) your future wealth position. This means sitting down and discussing the approach before any communications happen. Also, review all written communications before they are distributed so you can assess the impact. You know your spouse best and how you spouse will react to such communications. This is not the time to be spiteful. Rather, disciplined communications is critical at this point in time.

Let’s not forget this is your life and your money. As a result this is your wealth at risk that needs to be managed. No one else will be around when all is said and done. If things get nasty you can expect to lose much more than you ever thought from your divorce; much more than 50/50.

Key point: Manage how and when you present information to your spouse

Sharing too much information or the wrong information at the wrong point in time will impact your negotiating position and create wealth at risk for you. It doesn’t matter if you are the receiver or provider. The information you share at the wrong point in time will place risk on you. Negotiations are sensitive in nature. You have to be able to read the tea leaves from a distance while simultaneously being ever present in the thick of it all. Having an intimate understanding of the financial issues and how they intersect with each other along with the foresight to know the impact on your current and future wealth position is critical to manage your wealth at risk.

Another area to be careful of is how you design your settlement structure

Your settlement structure is an easy target to place your wealth at risk. Even though you worked hard to manage your wealth at risk, if you do not uncover all of the items that can pose risk to you in your settlement structure you will discover your wealth was at risk as it was not properly uncovered or managed. There is a process to uncover wealth at risk. To manage it requires another process too.

You will experience the risk through one or more transactions in your future after your divorce is settled. Reviewing the 700 line items will mitigate the risk you could experience in your life. There are many areas to look for wealth at risk, you just need to know where to look, how to uncover them and how to position them in your divorce. If you decide to pay your spouse up front instead of over time you may have inadvertently shifted risk on your shoulders.

Wealth at risk appears in the decision making process

Decision making processes are commonly wrought with error. One wrong decision can lead to a disastrous outcome for you and place your wealth at risk. Each decision needs to be socratic in nature, be supported by clear logic and align to your end goals and objectives. How you frame your decisions in context to your current and future financial profile is key to your manage wealth at risk.

Your divorce decree poses a lot of risk

Drafting your divorce decree naturally comes near the end of the process. Yet this is one area that can place a lot of risk on your shoulders. Why? If your divorce decree appears like legalese then the language may be subject to interpretation. You need to make sure all of the hard work you’ve put into the process to date is clearly captured to reflect your intentions and objectives. Divorce decrees need to be designed to from a process perspective. Meta processes are supported by micro processes and they likely have to be integrated with each other too. If you are having legal professionals draft financial terms and conditions you will experience wealth at risk. Legal professionals are experts at navigating the legal system. Financial divorce architects are experts at designing effective outcomes and translating that into clear and concise terms that need to be incorporated into your divorce decree. Using the right professional at the right point in time is critical to manage your outcomes.

All of these components, if not properly managed, will reduce your future cash flow and constrain your ability to preserve and capture current and future wealth. Decisions you and your spouse have made prior to the present date as well as commitments you’ve incurred which are buried in various agreements become important as you navigate your divorce process to arrive at your desired outcomes.

When it comes to divorce there usually are a lot of moving parts. If you do not gain a clear handle on them you will experience wealth at risk during your divorce proceeding or long thereafter as an unpleasant wake up call where you needed to manage the bigger picture of “wealth at risk”.

About the Author

Larry Smith CPA, MBA

Larry is a Founding Partner of Divorce Outcomes, a specialty professional services firm that analyzes, architects and negotiates all of the financial aspects of a divorce.

Since 2003, Larry has worked with divorcing parties as their fiduciary to design sophisticated divorcing strategies that enable clients to preserve and create wealth from their divorce. As a technical financial expert, he uncovers hidden tradable components through various analytical and architectural processes to arrive at desired outcomes. He is an alumni of KPMG and Andersen and has expertise in:

  • technical accounting, taxation, business consulting, risk management, M&A
  • forensic analysis, performance analytics
  • M&A, business valuations, divorce management, family equity transfers, multi-party negotiations, communications management
  • advanced process engineering, cognitive performance technologies

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 a 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
  • close the divorce process as soon as possible

Throughout the process we evaluate our clients’ current wealth-at-risk and architect desired outcomes to best preserve or create wealth.

Learn more about us at 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.

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