The increasing complexity of modern relationships is having an impact on modern couples’ separations, according to Jeff Fishman, a financial planner and lawyer.
Fishman, who says he has seen his share of unusual divorce and separation situations, said financial advisors need to be the connection between the emotional and the financial-technical part of their clients’ lives.
Fishman, the founder and a managing member of JSF Financial, a concierge wealth management practice based in Los Angeles, has a female couple as clients who have been in a stable relationship for 20 years. When the firm was doing a financial plan for the couple, he learned one of the women never bothered to divorce her husband from more than 20 years earlier.
The situation, which is being resolved, is an example of the complications that can arise when things are not taken care of in a timely manner, Fishman said.
Among the issues that can be overlooked when a couple is facing a divorce or separation is the way community property laws may affect the division of property. Another item is who can claim Social Security benefits. Also, couples have to understand what happens to pension benefits, which usually cannot be left to anyone else if a spouse is involved. And they need to understand what the tax implications of a plan are.
“These situations often feel like playing whack-a-mole,” Fishman said. “You solve one problem, and another pops up. I’ve had a couple spend thousands of dollars in legal fees arguing about who should pay for the upkeep of the family’s horse.
“What gets overlooked by the financial advisor in these cases is the emotional aspect,” he said. “You can try to advise clients to have a prenuptial agreement to avoid future problems, but I have had three clients break off engagements because of prenups, so that is not foolproof.
“At the end of the day, the financial advisor has to realize what may be rational for one client, is not rational for another,” he said.