When clients ask me for advice on divorce, one common question is “When should we stop using the same bank account?”
I have a lot of collaborative law divorce clients. These people are working together to have a private divorce that they control. During the divorce, they are commonly both using the household checking account for their living expenses.
If you have chosen a collaborative divorce and/or are able to communicate with each other, you can both keep using the joint checking account until you are divorced. Many of my clients go this route. They both have had access to the bank account activity. They choose a date just prior to the anticipated date of divorce. On that day, they print online account statements and “freeze” the balances for the purpose of division. The attorneys and other advisors hand over their final invoices prior to that date. Those invoices are paid from the joint account before the account balance is divided. This eliminates the need for the couple to reimburse each other for spill over divorce expenses.
A client asked me the other day to predict the future balance in her soon-to-be-ex-husband’s retirement account. I’d like to share with you my answer to her.
There are no crystal balls in divorce advice. Here is a partial list of questions for which I would need answers before doing this task.
What will be his retirement plan contributions in the future? What if he changes them?
How much will his employer match? Will the match rate change?
Will he lose his job and stop contributing to the account?
How will he choose investments for the account? Will he hire an advisor? Will he do it himself? Will he switch between the two? How will that affect his investments?
What will his investments be? Mutual Funds? Bonds? Stocks? How many of each?Which funds? Which bonds? Which stocks? When will he buy them? When will he sell them?
How will the markets perform?
Will he buy low and sell high? Or will he buy high and sell low? A combination of both?
Okay, I get it that she wants to know how rich he is going to be years after the divorce. As my husband would say, it’s just one of those great mysteries in life.