Change can be exciting and adventurous; however, abrupt and unexpected changes can catch you off guard and leave you unprepared for what comes next in life. Your Atlas Wealth Management Advisor is here to help you through all of life’s surprises and unplanned events.
Here are a few examples and some things to consider:
At some point in a relationship, many partners expect to begin splitting finances thereby taking a big step towards sharing a life together. This is a topic that should be addressed early and often in relationships. A 2015 study by SunTrust Bank noted that 35% of couples experiencing stress in their relationship blamed differing views on their finances. Start having open conversations with your partner about your finances and your financial goals early to make sure that you are both on the same page and heading in the same direction. There is no one-size-fits-all guide on how to successfully manage finances as a couple, but discussing it is the first step.
As we head into a holiday season of celebrations with family and friends, it is important to note that we are also heading into engagement season for many excited couples! Although an engagement during this time of year can be an unexpected surprise for some, according to Wedding Wire, 40% of pre-COVID engagements occurred between Thanksgiving and Valentine’s Day. This means many happy couples are going to be planning for some very big and thrilling future life changes.
As you commit to forever, what steps can you take early in your engagement to prepare for the future? For a partner with substantial wealth or children from a previous marriage, a prenuptial agreement can be a valuable tool for a couple getting married. A “pre-nup” may protect a partner from any substantial debts of the other or protect assets for children from a previous marriage.
Unfortunately, as recently as 2019 the divorce rate in the United States was as high as 42% of married couples. So, what can you do if you find yourself in this situation? In the unexpected event of a divorce, there are many ways to try to safeguard yourself and your assets from negative impact.
While most people think that their first step is to contact an attorney (and that may be the case), a financial advisor should be your second call. A US Census report published in April of this year states that 20% of women who divorced in the last 12 months were likely to be in poverty compared to 11% of men. Working with your Atlas Wealth Management Advisor early can help mitigate negative financial impacts from a divorce.
When navigating a divorce, it is key to know if you live in a community property or an equitable distribution state. For those of us in New York, it is important to know that we live in an equitable distribution state. This means that all assets acquired during a marriage are subject to division upon dissolution of the partnership. This includes splitting savings accounts that have been established, personal property and real estate that have been acquired, and commonly, retirement assets that have been accumulated.
Following a divorce, be sure to identify any accounts or assets that require beneficiary designation updates and proceed accordingly. Commonly impacted accounts are employer sponsored retirement plans (401(k)s, 403(b)s, 457s, etc.), trust accounts, and life insurance policies. Make sure that your estate planning documents (wills, powers of attorney, healthcare proxies) are updated as well in order to ensure that your wishes are carried out accordingly in the event you become incapacitated. Working with your Advisor can help, as we will help you identify those accounts and documents that require updating as well as help you and your attorney implement those changes.
Life throws many changes our way; some are expected while others are not. Our goal at Atlas is to help you understand the available resources and to help you determine your best course of action in any situation. While we never want to see clients experience unexpected changes like divorce, we are here to partner with you to navigate whatever may come your way and to ensure your financial planning doesn’t fall off course.