Life After Divorce: Building a New Financial Plan

By: Donna LaScala, CDFA

Date" August 1, 2025 Divorce is not only the end of a marriage or the re-imagining of a family.  It also represents a potential major change in your current and future financial life. During divorce, individuals or couples must decide how to divide assets and liabilities—such as their home, retirement funds, and bank accounts—for post-divorce redistribution.  However, before they can determine what the “new normal” will look like, they need a deep understanding of their current financial situation.

Understand your current situation:

Doing a cash flow analysis of the present situation is step one in the divorce process.  This can be a daunting task for people at any stage of their lives. During divorce, while emotions are high and stress is even higher, sitting down to prepare a budget or statement of net worth can be overwhelming.

Prior to taking this task on, it’s a good idea for couples contemplating divorce to start collaborating with a financial professional such as a CDFA, Certified Divorce Financial Analyst.  This individual can help organize data, prepare documents for discussion, and perform a financial “checkup”.  Part of this process may involve conversations about their current behavior regarding finances. Is one member of the couple a saver vs spender? Is there a difference in attitude regarding the amount of money saved for things like vacations, education, and retirement? Does one person have an abundance mentality while the other has a scarcity position? What are the “fear triggers” that might exist for everyone? What emotional currency is operating that might be causing financial difficulty?  After identification of these elements, the process can continue more smoothly.

Couples should start by making lists of all cash flow --- incoming and outgoing --- with specific information regarding joint vs individual vs child expenses. Reviewing this list may provide valuable insight for individuals whose income is deposited automatically and who rely primarily on automatic payments for their expenses.  

Identify all assets:

The next step is to identify all the assets that are part of the marital estate. These could include the marital residence, secondary real estate, retirement accounts, bank accounts – both checking and savings, brokerage accounts and cash value life insurance. It is necessary to determine if these assets were acquired before marriage or inherited during it as separate property.   If applicable, these values should be appropriately classified to accurately determine the marital value of each asset.  While reviewing retirement assets, it is important to know if either party is receiving bonuses, stock options, restricted stock units and any types of deferred compensation so that can be added to the inventory.

In the event that either party owns a business, all documents and statements pertaining to that business must also be disclosed.  It is important to determine the value of the business, the individual’s ownership percentage and what the spousal entitlement would be. 

Working with a CDFA to perform this discovery and calculation is vital to the success of the outcome. All conversations about redistribution of assets must start with a clear valuation of the total pool.

Creating a working plan:

Creating scenarios of what the future may look like is the next step in the process. Several factors influence this step. Clear timeframes must be set.  Immediate, short-term, intermediate-term and long-term factors should be considered. If there are children involved, that can have a significant impact on the financial plan for each individual moving forward.

After assets and income are redistributed, each person should reassess their cashflow with this new information.  For example, if one individual is taking over the marital residence and buying out the other spouse it is important to know what the current mortgage is, if that mortgage is assumable, and, if the individual who is considering taking it over actually has the ability to qualify for the mortgage. Certified Divorce Lending Professionals (CDLP’s) can be extremely helpful for this exercise.

Continuing to work with the CDFA will assist everyone in formulating their new financial plan. Individual timeframes, cashflow, assets, and liabilities can be outlined in different formats, allowing for evaluation of each plan's consequences.  As in any financial planning process the plan should be a fluid document. It must make sense to the specific individual and there needs to be an understanding of the mechanics and implementation of the plan. Without it, the plan has the potential to fail.

In conclusion:

Divorce requires careful consideration and planning. Financial factors should be evaluated throughout the divorce process to ensure the best outcomes for everyone involved.  Working with a professional team comprised of legal, financial, and family support specialists ensures they have an optimal chance of success.