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Financial Planning After Divorce or Loss: Start Over Strong · The Wealth Cafe

• 0:15
  SPEAKER_00: I want to start this episode a little differently because the topic we are covering today, it isn't just a financial topic, it's a life topic.
• 0:23
  SPEAKER_00: One in three women will face a major financial transition alone.
• 0:28
  SPEAKER_00: This is either a divorce or the death of a spouse.
• 0:31
  SPEAKER_00: For most of them, it comes with grief, with a disruption and with decisions that have to be made at the exact moment when making decisions feels the hardest and is typically the last thing you want to be doing.
• 0:43
  SPEAKER_00: And here's what I've observed.
• 0:44
  SPEAKER_00: Sitting across from women in these moments, the ones that come through it with their financial lives intact and are often stronger, and not only the ones who had the most money, they're the ones who actually had a plan and they're the ones who built a plan pretty quickly.
• 0:59
  SPEAKER_00: On today's episode, this is going to be one for women who are in that chapter right now or might be approaching it, and they want to be prepared before that event actually ever arises.
• 1:08
  SPEAKER_00: So we're going to talk about the first 12 months after a divorce or the loss of a spouse and what that looks like financially.
• 1:16
  SPEAKER_00: What decisions need to be made, what mistakes are the most common, and what the women who get it right are actually doing differently.
• 1:23
  SPEAKER_00: There's two common paths that I see and one common challenge.
• 1:26
  SPEAKER_00: For those that are in divorce and widowhood, they are very different experiences emotionally, but they share a common financial thread.
• 1:34
  SPEAKER_00: And a woman who was previously part of a financial partnership is now the sole decision maker, and they have a really complex financial wealth mixture.
• 1:42
  SPEAKER_00: Sometimes she's been involved in every financial decision along the way.
• 1:46
  SPEAKER_00: Often she hasn't.
• 1:47
  SPEAKER_00: Either way, this first year is critical.
• 1:50
  SPEAKER_00: So why is year one so different?
• 1:53
  SPEAKER_00: The decisions that are made in year one after divorce or the death of a spouse have a disproportionate impact on the decades that follow.
• 2:00
  SPEAKER_00: Some of them, like beneficiary designations, quadrofiling deadlines, estate elections, they're actually time sensitive and some of them can even be irreversible.
• 2:08
  SPEAKER_00: Others, like investment allocation and an income strategy, they're going to compound over 20 or 30 years in either direction.
• 2:16
  SPEAKER_00: Now, getting these right, it's not about being perfect, and it's not about making the costly, fixable mistakes that I see far too often.
• 2:24
  SPEAKER_00: The biggest misconception, though, that I encounter is that I have so much time to figure this out, or I'll deal with the finances once I'm feeling more settled.
• 2:33
  SPEAKER_00: Now, I understand that impulse completely, but there are some decisions that matter the most, particularly in divorce.
• 2:40
  SPEAKER_00: They have hard deadlines that are tied to a settlement, and in widowhood, the tax elections and estate filing windows that close, whether or not you are ready, these are times that you actually need to pay attention for.
• 2:53
  SPEAKER_00: A 2026 survey found that 93% of women feel unprepared to manage finances after the death of a spouse.
• 2:59
  SPEAKER_00: 93%.
• 3:01
  SPEAKER_00: That's not personal failure, that's a systematic failure on how financial advice has historically been delivered to women.
• 3:08
  SPEAKER_00: Now, today we are going to spend time closing that gap so you are prepared for the next chapter of your life.
• 3:14
  SPEAKER_00: For executive women and you have significant assets, when you have the divorce or death of a spouse, this doesn't mean just we're going to divide up the house or a 401k.
• 3:23
  SPEAKER_00: It means we need to understand equity compensation, business interest, deferred compensation plans, your real estate portfolio, the trust, future estate plans, and any philanthropic vehicles that you may have.
• 3:34
  SPEAKER_00: Your investment accounts each have their own tax rules, there's different deadlines, and you have to have your own set of experts who need to be involved in this plan.
• 3:44
  SPEAKER_00: The financial complexity behind all of these decisions, once you have this amount of wealth, these different complex pieces, you need a different financial team that's going to support you, whether you're going through divorce or you've now become a widow.
• 3:56
  SPEAKER_00: For high net worth divorces, the biggest financial mistakes I see, they're not about who gets the house.
• 4:02
  SPEAKER_00: They're about equity.
• 4:03
  SPEAKER_00: Women who accept stock or RSUs in lieu of retirement assets without understanding their after-tax value, women who don't know what a quadro is or miss the filing deadline, or women who take a lump sum settlement and immediately trigger a massive tax event because no one is there to help them model out the tax consequences of each asset type.
• 4:23
  SPEAKER_00: Having a CDFA, a certified divorced financial analyst, on your team, it's not a luxury at this level of wealth.
• 4:30
  SPEAKER_00: It can be in a lot of times essential and make or break your future.
• 4:33
  SPEAKER_00: For those going through widowhood, there's a different reality.
• 4:37
  SPEAKER_00: When a spouse passes, the surviving spouse faces a compressed financial timeline while you're also going through the hardship of grieving.
• 4:45
  SPEAKER_00: There are estate returns to file, beneficiary decisions to make, income streams that may change or even disappear, and critically a shift from married filing jointly to single tax status that can significantly increase your tax burden starting in year two.
• 5:00
  SPEAKER_00: Now, many women don't know what's coming.
• 5:02
  SPEAKER_00: Year one as a widow is often one of the last years you have lower taxes.
• 5:06
  SPEAKER_00: Year two requires a completely new tax strategy.
• 5:10
  SPEAKER_00: The emotional and financial intersection, that is something I want us to tackle directly because seeking financial help during these times and transitions, this is not a sign of weakness.
• 5:20
  SPEAKER_00: This is actually one of the most strategic things you can do to help you make the most of this time while you can step away and still process and grieve and move forward with clarity and confidence.
• 5:31
  SPEAKER_00: This is about building your advisory team early so you have people around you who you can trust to help you guide and navigate during this time so you can step away.
• 5:40
  SPEAKER_00: So here is what most people know and think to do.
• 5:43
  SPEAKER_00: And I just want to cover the basics and then we'll get into the depth of this.
• 5:46
  SPEAKER_00: You know to update your will, change beneficiaries, close out the joint accounts.
• 5:50
  SPEAKER_00: It's the basic checklist.
• 5:51
  SPEAKER_00: And these things are all necessary, but this is just that top layer.
• 5:56
  SPEAKER_00: Now, some of the rules have hard deadlines.
• 5:58
  SPEAKER_00: Quadros and divorce, which is a qualified domestic relations order, and that is a legal mechanism for dividing your 401k, your pension, or any other employer plan that is part of a divorce settlement.
• 6:10
  SPEAKER_00: Now, if a quadro is not properly drafted and filed, the retirement asset, it can't be transferred.
• 6:16
  SPEAKER_00: And if the divorce is finalized without a quadro, you may have agreed to a portion of a retirement account in your settlement that you can't actually legally collect.
• 6:24
  SPEAKER_00: I've seen it happen, and it can be devastating, and it's so easy to prevent.
• 6:30
  SPEAKER_00: Now, the portability election, for those of you who are widowed, this is when your spouse passes away.
• 6:35
  SPEAKER_00: There is a window, generally nine months, to file an estate tax return to elect portability for their unused federal estate tax exemption.
• 6:43
  SPEAKER_00: Even if no estate tax is owed, filing to preserve this election protects the surviving spouse's combined exemption on a go forward basis.
• 6:52
  SPEAKER_00: Now, this is commonly missed because it requires proactive planning during one of the hardest periods of your life.
• 6:59
  SPEAKER_00: Now, beneficiary designation audits every account, retirement accounts, life insurance policies, annuities, payable on death, bank accounts, they all have a beneficiary designation that supersedes what is in your will entirely.
• 7:13
  SPEAKER_00: A woman who updates her will after divorce but forgets to update her 401k beneficiary, you may inadvertently leave your account to that ex-spouse.
• 7:21
  SPEAKER_00: I have seen this happen more times than I can stand.
• 7:26
  SPEAKER_00: Now, this is 100% preventable and something you need to make sure you're doing.
• 7:30
  SPEAKER_00: On a deeper level, what you need to consider is the tax filing status cliff for widows.
• 7:36
  SPEAKER_00: For those of you who have lost your spouse, this is generally the last year that you can do married filing joint, which generally has the most favorable tax bracket.
• 7:45
  SPEAKER_00: Now, the year following is when you're going to shift to single or qualifying surviving status for a spouse.
• 7:51
  SPEAKER_00: As an executive woman or previous executive woman, you probably have a lot of different streams of income.
• 7:57
  SPEAKER_00: And this shift and losing this can increase your tax burden in ways you're not prepared for.
• 8:03
  SPEAKER_00: Now, year one, after your tax loss, this is a good time to consider different strategies.
• 8:08
  SPEAKER_00: This could be time for Roth conversions, income shifting, charitable strategies.
• 8:13
  SPEAKER_00: In year two, you may have to take a look at different things.
• 8:16
  SPEAKER_00: For a quadro, the timing and tax strategy in divorce, even when a quadro is properly filed, the question is which retirement assets should you accept?
• 8:24
  SPEAKER_00: And that has major tax implications.
• 8:26
  SPEAKER_00: A$500,000 401k is not the same as a$500,000 Roth.
• 8:32
  SPEAKER_00: A pension with a monthly benefit is not the same as a lump sum equivalent, and your divorce settlement should not be modeled on a pre-tax basis, but on an after-tax basis and should be showing you after those taxes, what are you going to actually be getting into your pocket?
• 8:48
  SPEAKER_00: Something that is frequently overlooked by your divorce team, and it costs women a lot of money.
• 8:56
  SPEAKER_00: To paint the scene for you, I want to give an example of a client who I had come in a couple years ago.
• 9:02
  SPEAKER_00: She was 54 years old and she was a recently divorced VP of operations at a pharmaceutical company.
• 9:08
  SPEAKER_00: She had been married for 24 years, and finally, after 18 months, her divorce was finalized.
• 9:13
  SPEAKER_00: She came to me, though, six weeks after the divorce settlement was finalized.
• 9:17
  SPEAKER_00: She was referred over by her attorney, but the problem was the settlement included her family home, which is$1.2 million, her$401, which is$380,000, and a portion of his deferred compensation, which was settled by a quadro, but the quadro had never been filed.
• 9:33
  SPEAKER_00: She also had accepted a large portion of marital assets pre-tax, meaning her$2.1 million settlement had a significantly lower after-tax value than she understood when she signed.
• 9:44
  SPEAKER_00: So her ex-husband kept the taxable brokerage accounts, and she was left with a large sum of money that was going to be, on an after-tax basis, a lot lower.
• 9:54
  SPEAKER_00: So what did we do from here?
• 9:56
  SPEAKER_00: We immediately engaged a quadro specialist who was able to help us before the statute of limitations arose.
• 10:01
  SPEAKER_00: So when we built the full after-tax picture of what she has, we then began a multi-year Roth conversion strategy.
• 10:08
  SPEAKER_00: We also rebuilt her estate plan from scratch.
• 10:10
  SPEAKER_00: She actually needed a new will, trust, and updated beneficiary designations on that account.
• 10:16
  SPEAKER_00: Additionally, we had to make sure she had a new power of attorney and health care proxy for all of her accounts.
• 10:22
  SPEAKER_00: This was because she needed to have a family member who was nearby who was going to help her and take care of her, not just her ex-husband, who probably would not have been making the best decisions if she had needed everything.
• 10:34
  SPEAKER_00: She had so many different pieces moving on, and that finally, when everything was settled and done, we were able to create a full financial picture for her so she could understand what her life was going to look like moving forward.
• 10:46
  SPEAKER_00: Once we were all done with this, she sat back and said, For the first time in a decade, I feel like I am in control of my life.
• 10:52
  SPEAKER_00: She had left this toxic relationship, she had a plan in order, and she was in the driver's seat.
• 10:58
  SPEAKER_00: She had the right people making financial decisions for her.
• 11:01
  SPEAKER_00: And although not everything settled in the right way because her quadro wasn't filed on time, she was able to move forward in a way that she wanted to.
• 11:10
  SPEAKER_00: So what can you do in your life and do as you move on from here?
• 11:13
  SPEAKER_00: The first of which is if you know that you are going to be going through a divorce in the next year, make sure you get as much paper information as you have.
• 11:22
  SPEAKER_00: Understand all of the accounts you have, who are the beneficiaries on them, and start building your financial team now.
• 11:29
  SPEAKER_00: This is a good time if you plan on working with a CDFA to start interviewing people, figure out who the right person is, and ask questions to figure out how they can help guide you throughout this process.
• 11:39
  SPEAKER_00: Make sure they are going to work well with your family law attorney and that they are prepared given the types of assets that you have.
• 11:45
  SPEAKER_00: Not every CDFA is qualified and has experience working with all different types of assets.
• 11:51
  SPEAKER_00: Some are familiar with working with Equity Comp, others have never dealt with it before.
• 11:55
  SPEAKER_00: And that valuation and having that experience can really come into play here.
• 12:00
  SPEAKER_00: So you want to make sure you have the right team on your side.
• 12:03
  SPEAKER_00: If you know that you are going to be losing a spouse soon or have had a lot of different health circumstances, we can never fully predict this.
• 12:12
  SPEAKER_00: But what is essential is that make sure you are familiar with your financial team.
• 12:18
  SPEAKER_00: Build out those relationships and get comfortable with the people you are working with.
• 12:23
  SPEAKER_00: Death is such a hard thing for so many of us to navigate, and you're losing somebody.
• 12:28
  SPEAKER_00: And in many circumstances, it is somebody you love.
• 12:31
  SPEAKER_00: It is never something we are fully prepared for on the emotional side or that we can fully predict.
• 12:37
  SPEAKER_00: That being said, do the best you can with every piece of information that you have.
• 12:41
  SPEAKER_00: This is a good time to lean on your support system, make sure you have the right team in place.
• 12:46
  SPEAKER_00: And if you recently lost a spouse or know someone that did, share this episode with them so that they know where to start and know who to lean on and who to trust during this time to help them navigate it and who can handle their financial situation so they can step back and grieve with their loved ones.
• 13:04
  SPEAKER_00: I appreciate you joining me on this episode of the Wealth Cafe.
• 13:06
  SPEAKER_00: And if you want a second opinion on any of your finances, help navigating divorce or this time of transition, you can apply for an introductory call by going to tannisfingroup.com slash contact.
• 13:17
  SPEAKER_00: And I look forward to seeing you again on the next episode.