The Intersection of Family Law and Financial Planning: How a Wealth Manager Can Help During Marital Transitions
Guest Post: By Faisal Karmali
Marital transitions, whether separation, divorce, or remarriage, can have a profound impact on your financial future. These moments often bring emotional stress, but also legal and financial consequences all at once. The stakes are even higher when you've built significant wealth and are close to retirement.
When a relationship ends, most people immediately think of lawyers and the legal process. However, there's another crucial aspect that's often overlooked: comprehensive financial planning. A divorce settlement isn't just about dividing assets, it's about establishing the foundation for your financial future, which can span decades beyond the legal proceedings.
The Overlooked Side of Divorce: Long-Term Financial Health
Family law focuses on the legal division of property, parenting arrangements, and support obligations, but it doesn't address the long-term impact divorce can have on your wealth, retirement goals, or legacy planning. That's where a wealth manager can help. Not to replace your lawyer, but to complement your legal strategy with a clear, forward-looking financial plan.
Divorce creates immediate financial challenges from potentially moving to a new home to adjusting to a different cash flow situation. But the complexity goes deeper, especially if you've accumulated substantial assets together. A wealth manager who specializes in marital transitions can provide clarity during this uncertain time.
A wealth manager with experience in assisting clients during a divorce can help you understand how a divorce settlement might affect your lifestyle, tax position, or retirement income. You need to stress-test your plan–not just for market fluctuations, but for life volatility too–considering things like divorce, reestablishing your wealth and health changes. Then you can see how decisions made today could impact your future decades down the road.
Key Areas Where a Wealth Manager Adds Value
1. Division of Complex Assets
Private businesses, real estate holdings, and investment portfolios often require more than a 50/50 split. It is strongly recommended that you collaborate with your legal and tax team to value these assets properly and help ensure any division is tax efficient.
Many people don't realize that different assets come with different tax implications. For example, receiving $500,000 in retirement accounts versus $500,000 in cash or home equity can have vastly different long-term values after considering taxes and growth potential. A wealth manager can help you evaluate these nuances when negotiating your settlement.
2. Income Planning During and After Divorce
Suddenly, going alone financially changes everything, especially if you're nearing retirement. Creating a post-divorce financial plan takes into account your income needs but also other areas like real estate purchase, health care cost and tax strategy.
This planning becomes even more critical for those who haven't been actively involved in managing household finances. Surprises constantly pop up that you didn’t even know were happening because of that lack of knowledge. A wealth manager can help bridge those knowledge gaps and empower you to make confident financial decisions. They'll work with you to develop a sustainable withdrawal strategy from your investments, optimize retirement benefits (which may include spousal benefits even after divorce), and identify potential income gaps that need addressing.
3. Protecting the Next Generation
Blended families can throw another wrench into estate planning. A thoughtful wealth plan can protect your children's inheritance while still meeting your obligations to a new spouse.
This might involve establishing trusts, updating beneficiary designations, or creating other legal structures to ensure your wishes are carried out. Without proper planning, default inheritance laws could distribute assets in ways you never intended, potentially leaving children from previous relationships with less than you'd want.
4. Strategic Giving and Legacy Planning
Getting a divorce doesn't mean you have to divorce your charitable giving or legacy goals too. You can rework your strategy in a way that continues to affordably reflect your values.
Many clients find that maintaining philanthropic commitments provides a sense of stability and purpose during challenging transitions. Your wealth manager can help you adjust your charitable giving strategy to fit your new financial reality while still supporting causes important to you.
Rebuilding Financial Confidence
Beyond the technical aspects of financial planning, a wealth manager serves as a trusted advisor during a vulnerable time. Many clients find themselves making financial decisions independently for the first time in years, or even decades. Your wealth advisor can provide education, guidance, and reassurance as you navigate this new territory.
Coordinating Your Professional Team
During marital transitions, you'll likely work with several professionals: lawyers, mediators, accountants, and possibly therapists or counselors. A wealth manager can serve as a financial quarterback, ensuring everyone works toward your best interests with a comprehensive understanding of both your immediate needs and long-term goals.
This coordination becomes particularly important when navigating complex settlement negotiations or implementing court orders. Your wealth manager can help translate legal requirements into practical financial steps, helping to ensure things don’t fall through the cracks during implementation.
Looking Forward: Financial Planning for Your Next Chapter
While divorce marks the end of one life chapter, it also represents the beginning of another. Your wealth manager can help you establish new financial goals, whether that's rebuilding retirement savings, purchasing a new home, or simply establishing financial independence.
During a marital transition, your legal team is focused on your legal rights, while a wealth manager is focused on your financial future. As we work together, we can help ensure you come out on the other side with a plan that still makes sense. One that grows and protects your wealth in this new chapter of life.
Many clients find this forward-looking approach particularly valuable, as it shifts focus from the emotional pain of divorce to the possibilities that lie ahead. Together, we can develop a roadmap that not only addresses immediate concerns but builds toward your ideal financial future.
Navigating a major relationship transition requires a delicate balance—addressing the legal complexities while also setting yourself up for a secure and sustainable financial future. At Crossroads Law, we work closely with financial professionals to ensure your settlement reflects both your immediate needs and long-term goals. Whether you need support with complex property division, updating a separation agreement, or protecting your legacy and retirement, our experienced family lawyers are here to guide you. Book your free consultation with Crossroads Law today.
ABOUT THE AUTHOR:
Bio:
Faisal Karmali is a Senior Wealth Advisor with the Popowich Karmali Advisory Group and media personality on QR Calgary and CTV. He has dedicated his career to helping people improve their financial security as they prepare for and live in after divorce and in retirement.
Links:
PKAG: https://woodgundyadvisors.cibc.com/web/popowich-karmali-group/
MTM: https://morethanmoneyradio.com/
David Popowich and Faisal Karmali are Investment Advisors with CIBC Wood Gundy in Calgary. The views of David Popowich, Faisal Karmali, and guest author do not necessarily reflect those of CIBC World Markets Inc. This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. Individuals are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors. CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc
