In the Jan. 27 article, “Advisors Can Greatly Help With Two Divorce Subjects,” Mr. Cordell discusses how financial advisors can assist in the structuring of divorce settlements in a tax-advantaged manner, and the division of retirement benefits.
“Although divorce attorneys will have a basic understanding of the tax and benefits issues they come across on a daily basis, a good financial advisor will have a much firmer understanding of the intricacies involved with these particular subjects,” Mr. Cordell said.
Some examples of matters that a financial advisor is likely to have a better grasp of than a divorce attorney include differentiating between traditional and ROTH IRAs, handling investment accounts, and understanding tax and benefits laws, including those addressed in qualified domestic relations orders.
Mr. Cordell explained that because the typical clientele of the average or “good” divorce lawyer falls in between the wealthy and the lower threshold of the middle class, a large majority of people going through divorce fail to involve a financial advisor in the process, and that mistake can cost them tens – or even hundreds – of thousands of dollars. That’s because the wealthy clients likely routinely communicate with financial advisors, and the less wealthy may not have a need for financial experts.
Mr. Cordell also advised financial advisors to be proactive in proving his or her value to the client that is going through divorce. Typically, it will be on the advisor to make the initial move in showing how they can help.
“Explain to the client that you have a much better understanding of these complex issues that must be resolved during the process, and that it would be very beneficial for them to approve communication between you and the attorney,” Mr. Cordell said.