A financial advisor is a professional who can help you manage life's changes and challenges. Several examples include getting married, starting a family, getting divorced, retirement planning, estate planning, inheriting wealth and managing financial affairs following the death of a loved one. Someone with this kind of expertise can help you during emotionally turbulent periods (even if the life event is a positive one!) and potentially save you time and money.
Marriage or Shared Relationship
Assistance with marriage can occur either when you're younger and are getting married for the first time, with a second marriage, if you find yourself in that position, or for a silver marriage. Financial considerations during marriage will include disclosing assets, liabilities, student or credit card debt and, potentially, any bankruptcies that may have occurred.
A financial advisor can help develop a personal financial statement, assist with budgeting and determine effective strategies to manage debt or develop a spending plan in a relationship. The latter can be particularly valuable for younger couples getting married and involve making a decision about whether to have a joint or separate accounts to pay bills. A financial advisor can also assist with setting goals and project the tax consequences of different tax filing options. What are the advantages, for example, of filing your taxes as a married couple or filing separately? Later into your married life, when you’re ready to start a family, a whole list of other questions will present themselves such as: How important is it to get life insurance and which kind should I get? What are good budgeting strategies for saving for college for my children? When should I prepare a will and assign a guardian in case anything happens to me?
Getting divorced is another major family event, though an unfortunate one. This, too, provides an opportunity for a financial advisor to help you prepare a schedule of assets and determine an equitable division of those assets. A financial advisor can help you navigate the details of alimony and childcare decisions, budgeting and tax consequences—which are all important consequences of a divorce that require careful consideration. Each couple’s divorce will be different as will the tax consequences. The couple may have a house that would be sold as part of the divorce and provide a taxable gain. A financial advisor can try to ensure the tax implications impact both separating spouses equally or to their mutual satisfaction during a divorce.
Estate planning focuses on the question of planning inherited assets. No one wants to think about a situation where an unexpected early death or incapacitating event triggers the distribution of assets but it’s still wise to plan ahead. A financial advisor can assist with how these assets are taxed and titled, and the role of probate and charitable giving. With a number of gift tax issues currently under discussion in Washington, DC, this is an area of particular concern right now. If you happen to be the beneficiary of an estate (especially of a significant amount of assets), a financial advisor can help manage the inheritance. Are there debts to pay down? Or will you choose to invest instead? There may be tax implications in each scenario.
Retirement planning is an area where financial advisors spend a significant amount of time helping clients. Very few questions run through aging individuals’ minds more than wondering if they will have enough money to retire. Advisors provide retirement projections for various scenarios – such as what the financial impact would be if the retiree moves out of state. How would the cost of living compare? And would there be an advantage to continue working following the move? A good rule of thumb is to consider working with a financial advisor at least 10 to 15 years before your planned retirement date. This will provide enough time to also consider the impact of retirement on your children or other family members.
Death of a Loved One
Finally, a great detail of financial preparation must accompany the unfortunate death of a loved one—for a surviving spouse or heirs. Here again, a financial advisor can be of great value. Asset management and trust and estate concerns inevitably lead to budgeting cash flow questions as well. An experienced professional can help you make sense of it all, and save you headaches and, potentially, money.
Complex financial considerations accompany most major life events. Contact Judy Barnhard should you need assistance navigating the complexities of such transactions.