Advanced Underwriting Consultants

HELPING CLIENTS MANAGE LIFE INSURANCE, ANNUITY AND PENSION ISSUES DURING A DIVORCE

INTRODUCTION

 Working with clients on their financial and estate plans can be messy.  For every family where the couple has a stable marriage and great relations with responsible children, there seem to be four families with marital issues.  The financial professional’s responsibility is to help clients match up a planning strategy with family particulars. 

Inevitably, those who work in the insurance and financial planning businesses will deal with clients who are going through a separation or divorce.  Both create stress in clients in many ways.  Financial issues and how to sort them out are a big part of the divorce difficulty. 

Each state has its own rules about the divorce process.  We won’t attempt to sort them out in this newsletter.  However, we can make some general observations about the process. One of our objectives is to define the role of the financial professional in helping a client think about tax and practical issues during the early phase of the divorce process.  Another objective is to make sure the details are buttoned up during the final phase. 

What financial issues might a client going through a divorce need help in sorting out? 

  1. Dividing up nonqualified investments
  2. Planning for the division of a pension account
  3. Thinking about the tax issues associated with child support and alimony
  4. Changing life insurance beneficiary designations to conform to new circumstances 

The divorce process is usually a difficult and emotionally-charged process for our clients.  It can be incredibly helpful to be the objective voice of reason during the process.  There are plenty of opportunities for mistakes during divorce, which can be hard to overcome.  The financial professional who acts as a technical and practical guide can strengthen the relationship with the divorcing client.