This article is from Richard D. Soat, a San Antonio-based financial professional with BDO (a professional services firm providing assurance, tax, financial advisory and consulting services) and a board member of the Collaborative Law Institute of Texas. The opinions expressed on this site are Rick Soat’s own and do not necessarily represent the views of BDO USA, LLP.
A few months ago, I came across this article discussing sudden wealth arising from a divorce decree. While the article provides a financial checklist that’s useful for anyone going through the divorce process, the title reminded me of a case I worked on recently.
In this case, the husband had inherited land in an oil rich territory, and received large amounts in royalties prior to the completion of the divorce. While he was under no legal obligation to split the proceeds from his inheritance (as this is his separate property), he decided to share a large percentage of this income with his wife as part of in the divorce decree. Suddenly (and quite surprisingly), she had much more wealth than she was used to managing, and she worked with her attorney and me as to how the money would last throughout her entire life.
Even if you don’t come into sudden wealth as the result of a divorce, you want to make sure that you’re equipped to handle your own finances in divorce. If you didn’t handle financial matters during your marriage, handling your own finances can be as disorienting as receiving sudden wealth. There are a few steps you can take to help get a handle on your own finances.
First, take stock of what you have and what you can spend. Assessing your assets and determining your budget – honestly looking at your income and expenses – is the best first step you can take to financial well-being.
Next, make sure you take the time to get familiar with your finances. Track your spending for several months to make sure you’re sticking with your budget. Use financial software like Quicken, or, if you prefer, go through the process of balancing your checkbook by hand.
If you have further questions about finances, find a financial professional you trust, by asking people you trust for referrals, which could include family, friends, and your bank. You should be prepared to talk about how much money you need to live on, how much money you want to invest, and what level of risk you’re willing to take on. Even if you don’t come into sudden wealth, you want to work to build the wealth that will sustain you in retirement.