Getting Divorced? Understand The Money Issues

Posted: Updated:
Elaine Bedel established Bedel Financial in 1989 in Indianapolis. Elaine Bedel established Bedel Financial in 1989 in Indianapolis.

Divorce is a traumatic experience and financial aspects can add to the stress. Decisions are hard to make if you don't have a clear and complete understanding of the family's current financial situation and what your future may look like.

The primary financial objective in a divorce settlement should be to allow both parties to be as economically secure as possible. If total security cannot be achieved, due to limited family assets, you must have a plan. The "fear factor" will be removed if you have confidence that your future financial situation is workable.

Preparing for Negotiations

Prior to entering into the negotiation stage, it is important for both parties to have a clear understanding of their financial position and personal needs by doing the following:

List family assets.  Determine the value and ownership title of all family assets. Be sure to include investment accounts, real estate, and employee benefit plans such as 401(k)s, stock options, and pension plans. You may need to have some assets appraised or professionally evaluated to determine a market value that both parties can accept. Knowing the cost basis of each asset is also important so that when the assets are divided, each party will understand their individual tax liability upon sale. This is particularly important if assets need to be sold in order to meet the cash requirements of either party.

Determine living expenses. As you contemplate your future, reduce your thoughts to numbers. Consider both a comfortable amount and the absolute minimum you need to meet living expenses. Don't forget the impact of inflation on your spending.

Analyze income sources. If you work, earned income may be a major source for meeting your living expenses. If you do not work, or if earned income cannot meet your needs, the division of assets becomes very important. In cases where the family assets are not significant, finding a job that can provide for your lifestyle must be considered. The earlier you face this reality, the better.

Settlement Negotiations

The division of property and the amount of supplemental payments will be determined through negotiations. The asset division may be equal or weighted more heavily in favor of one spouse. A factor that may influence the percentage split is the unequal future income potential of one spouse over the other. 

Once the settlement percentage is agreed upon, it is important to understand the advantages of owning one asset over another. For example, if one spouse needs immediate liquidity, it may be more appropriate for a savings account to be allocated to that person and the stock investments to the other. If liquidity is not needed, it is more advantageous to have a tax-deferred investment, such as a 401(k) or IRA, than a regular investment account where taxable dividends and interest are created each year. 

If a family business is an asset to be divided, it may be better for one spouse to accept a note from the other for his or her share instead of forcing the business to be sold. It may also be difficult to manage the business if both remain as shareholders.

Divorce Agreement

In order to protect both parties, the divorce agreement needs to reflect settlement provisions as well as future financial responsibilities, such as college and medical costs for children. Along with the division of assets, the agreement should also indicate who is responsible for initiating account or property transfers.

Life Insurance should be considered as a requirement on either or both parties to ensure financial responsibilities are met in the event of an untimely death.  This should include any on-going monthly or lump sum settlement payments as well as future obligations for children.

Follow-Up Issues

Once the divorce is completed, review all aspects of your financial plan to make sure everything reflects your new situation. Beneficiary designations on retirement accounts and life insurance should be reviewed. You will likely need to update your estate plan. You may need to establish credit in your name as well as consider relationships with new advisors and financial service providers.


The financial aspect of a divorce settlement is key to the future security of both parties. A fair division of assets and supplemental income payments can be more easily attained if the "fear factor" is removed. Before negotiations begin, become knowledgeable yourself or find a trusted advisor who can help you through the process. 

Elaine E. Bedel, CFP, is CEO and president of Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. She is a featured guest each Wednesday on the WTHR (NBC, Indianapolis) Channel 13 News at Noon, "Your Money" segment. Elaine's book, "Advice You Never Asked For... But wished you had," is available on For more information, visit or email Elaine at

  • Perspectives

    • Focused Collaboration Leads to Effective STEM Leadership

      As a woman who has built a career in a STEM field, technology, I have come to realize that collaboration is an essential ingredient for organizational growth and survival. As my year serving as president for Women & Hi Tech comes to an end, one of the most impactful takeaways for me has been how a shared vision and strategic partnerships can help change the landscape for women studying science, technology, engineering or math in Indiana.



  • Most Popular Stories

    • Walmart Details Crawfordsville Layoffs

      Walmart Inc. (NYSE: WMT) has announced plans to reduce its workforce at the Walmart Optical Lab in Crawfordsville. In a notice to the state, the company did not provide a reason for the reduction, but said 108 employees will be out of work by the end of September.

    • Indy Tech Vet to Lead DePauw Center

      DePauw University has tapped an Indianapolis tech veteran to become a part of its leadership team. Steve Fouty, who most recently served as chief financial officer of ClusterTruck in Indy, has been named director of the McDermond Center for Management and Entrepreneurship on the Greencastle campus.

    • Airports in Indiana Secure FAA Grants

      Seven Hoosier airports and the Indiana Department of Transportation have received support for projects from the Federal Aviation Administration. Funding through the Airport Improvement Program will be used for infrastructure work including runways, terminals and firefighting and snow removal equipment. Nearly $660 million was distributed throughout the country in the most recent cycle.

    • Study: Hoosier Graduation Rates Continue to Rise

      A new report from the Indiana Commission for Higher Education says graduation rates among Hoosier college students are higher than ever. The 2018 College Completion Report says 38.5 percent of students graduated on time, up 4 percent from the previous year and nearly 14 percent over the past five years.

    • Caesars now owns Indiana Grand in Shelbyville and Hoosier Park in Anderson.

      Acquisition of Indiana Racinos Complete

      Las Vegas-based Caesars Entertainment Corp. (Nasdaq: CZR) has completed its $1.7 billion acquisition of Centaur Holdings LLC in Indianapolis. The deal adds Hoosier Park Racing and Casino in Anderson and Indiana Grand Racing and Casino in Shelbyville to Caesars' portfolio. The company says it will invest $50 million into various property improvements and IT upgrades at both facilities. Caesars says it plans to add table games to both properties, pending necessary approvals.