Life Events How to help clients and prospects get through a divorce

Supporting clients and prospective clients who are in the process of divorcing demands your full range of skills as an advisor. 

For one thing, advising on divorce may require a different playbook. Investment management and financial planning are important, but bedside manner may be even more so. Demonstrating empathy and acting as a sounding board for a divorcing client’s fears and aspirations can help forge the trusting dynamic needed to navigate a challenging process. That trust can go a long way toward strengthening your long-term client relationships. 

Advising on divorce may also require familiarity with professional skills and experience outside of your wheelhouse – including estate planning, forensic accounting and property issues, to name a few. While you will not likely be the sole professional offering advice on these issues, you can help divorcing clients spot and understand them, providing directional advice to help clients feel more prepared as they work with others on their team. To help with this, we have created a divorce conversation guide with questions to ask, as well as a client-facing resource to help answer some basic questions. 

Here are a few ways in which financial advisors can help clients who are getting divorced.

Offer tips for getting organized and oriented

An easy way to help clients who are getting divorced is to act as a sounding board and encourage them to take steps that may benefit them during the process. Here are a few examples. 

Help them gather essential documents. Pulling together paperwork can be tedious, but it’s critical and gives those facing divorce a sense of control. Counsel clients to compile their bank, credit card and brokerage statements, mortgage information, estate planning documents and prenuptial agreements. You may also urge them to run a credit report, which will provide a financial snapshot and surface any joint obligations or debts.

Explain marital and separate property and their state’s approach to dividing it. Two major determinants in a client’s divorce settlement will be the question of marital versus personal property, and their state’s approach to dividing it. For example: Basic explanations of community property and equitable distribution concepts can reduce uncertainty and help your clients more clearly envision their financial future.

Share the “house rules.” Often the most pressing question for divorcing clients is, “Who keeps the house?” The answer is rarely straightforward. Some couples sell and divide the proceeds; in other cases, one spouse buys out the other. Sometimes couples elect to defer the sale for a specific period of time – for example, when the youngest child turns 18. The tax and financial implications of each scenario differ. Together with the client’s tax professional, you can help them think through it.

Check in on savings, investments and financial habits

A divorcing client’s financial literacy and historical level of engagement with family finances will dictate how much guidance they’ll require. Some clients may be managing investments or household finances independently for the first time. You can explain key concepts, walk through statements and help clients make informed decisions without feeling overwhelmed.

Help clients reset their financial baseline. Divorce can change income, expenses, assets, liabilities and long-term goals all at once. You can help clients build a clear post-divorce financial snapshot, including cash flow, debt obligations, account ownership and expected settlement assets.

Create a realistic spending and savings plan. Clients may need to adjust to living on one income or paying expenses they previously shared. You can help them create a practical budget, rebuild emergency savings and identify new savings targets for retirement, education or housing.

Review and realign the investment strategy. A client’s pre-divorce portfolio may no longer reflect their risk tolerance, time horizon, liquidity needs or goals. Help them evaluate whether asset allocation, account types and investment risk still fit their new circumstances.

Encourage smart financial habits early. Advisors can help clients establish habits that support long-term stability, such as tracking spending, automating savings, reviewing credit, keeping beneficiary designations current and scheduling regular financial check-ins.

Watch for emotionally driven decisions. Divorce can be stressful, and clients may feel pressure to make fast decisions about the house, investments or lifestyle changes. Advisors can provide a steady perspective and help clients weigh short-term needs against long-term financial security.

Flag key tax considerations for those facing divorce

Because most married couples file personal taxes jointly, divorce will mean potentially meaningful changes in the tax status for divorcing clients. But that is not the only tax issue to be aware of. Here are some important facts to share:  

Income taxes: Filing as a single person, rather than jointly with a spouse, may result in a substantial change to a client’s annual income tax bill, for better or worse. Either way, your client should work with a certified public accountant (CPA) to understand post-divorce income tax projections.

Alimony: Taxes and alimony get tricky depending on the timing of the divorce. For divorces finalized in 2019 or after, at the federal level, alimony payments are not deductible by the paying spouse and are not considered income of the recipient spouse. For divorces finalized in 2018 or before, the opposite is true: The paying spouse can take a deduction, and the recipient reflects the payment as income on their return.

State tax law around the tax treatment of alimony varies. In certain states, the federal pre-2019 deductibility still stands. Clients should consult with a CPA who is well versed in the tax laws in their home states.

Child support: Child support payments cannot be deducted from the payer’s income taxes and are not considered income to the recipient.

Gift and estate taxes: Under the unlimited marital deduction, in a typical marital estate plan, gift or estate taxes might not need to be paid until the death of the second spouse. But if your client is no longer the primary beneficiary of the assets upon the ex-spouse’s death, your client no longer gets the benefit of that deduction. That’s why clients with substantial assets should talk to an estate planning attorney about how to mitigate potential liability. Cash may also be a concern if estate taxes are due, so it's essential to maintain a pool of liquid assets to satisfy any liabilities. Notably, the federal estate and gift tax exemption amount is $15 million per individual ($30 million for a married couple) in 2026, according to the IRS, which means relatively few clients will need to worry about paying an estate tax.

Reconsider estate planning essentials

While it’s generally true that estate planning documents remain in effect after a divorce, they no longer operate in the same way. In many states, the provisions of a will or living trust that benefit or give authority to a spouse are no longer effective upon divorce or even a legal separation. 

In certain states, an ex-spouse is considered deceased where the estate plan documents are concerned. This means an ex-spouse named as beneficiary to the assets upon the death will be overlooked, and the assets pass to the next beneficiary in line. Because these laws are designed to protect the recently divorced who die before updating an estate plan, both parties need to be aware of them and plan accordingly.

Those divorcing will likely need to rethink their estate planning essentials: 

Advance health care directive: Also known as a “living will,” this document allows clients to appoint the individual who will make health care decisions for them in the event they can’t speak for themselves. This document also details end-of-life wishes.  

Will/living trust: These documents dictate how assets are disposed of upon death and who manages that process (i.e., the executor or trustee). Even if clients don’t see the need for changes to a will or trust, you may recommend they consult an estate planning attorney about updating generic or “boilerplate” provisions.  

Financial power of attorney: This document designates the person who will handle clients’ financial matters if they are unable to do so. If a client owns assets that are complex (like a business) or located in other states, you may recommend consulting an attorney about the need for additional financial powers of attorney.  

Updated designations for beneficiary-named accounts: Retirement assets and insurance policies are generally distributed according to their designated beneficiaries, not the terms of a client’s will or living trust. Clients should regularly review and update beneficiary information on those accounts. This is also a good chance to review how recent retirement legislation may affect clients’ retirement planning.

In cases where an estate plan is already in place, there are a few questions your clients may want to consider. 

What are the guardian provisions? If minor children are involved, who will be the guardian if both your client and their ex-spouse die? If the current choice is a family member or close friend of one spouse in particular, it may be worth discussing an alternative.

When it comes to the kids, it’s best to know the divorced couple is on the same page regarding successor guardians. If she appoints her sister and he appoints his brother, it’s the court that chooses between the two. And there’s a risk of the decision being neither, which could create conflict and uncertainty for the children at a challenging time. Remind clients of other considerations that might come into play when choosing a guardian, such as geography, capacity and changing family dynamics over time. 

Who is the executor or trustee? Who should be named as executor or successor trustee? The answer is subjective, depending on the relationship between the divorced couple and other family dynamics.

Naming an executor or trustee comes down to choosing who will manage and dispose of your client's assets when she dies. If the client’s only beneficiaries are the children with the ex-spouse and their interests as parents are aligned, your client may prefer the ex-spouse serve as the fiduciary. If the children are minors, distributions from the trust may go to the ex-spouse acting in the role of the children’s guardian.

In a nasty divorce, your client may consider naming someone else close to the children. In some cases, a corporate trustee may be a wise option. It may be helpful to have clients think about this as a shorter term decision that can be changed over time.

Is there an irrevocable trust? Irrevocable trusts generally cannot be changed or nullified. However, many irrevocable trusts include provisions that allow certain changes. Some state laws provide similar flexibility.

An estate planning attorney can help your client understand how any trusts created during the marriage can be modified. Even if you covered this in the divorce negotiations, these types of trusts typically don’t “belong to” either spouse and are sometimes overlooked.

If the client had an irrevocable trust during the marriage, the questions are similar: Should there be a change to the trustee or successor trustee? Can any distributions be adjusted to reflect changes in the family’s financial situation after a divorce? And will there be conflict over other trust provisions down the road?


Are beneficiary designations in place? After a divorce, beneficiary designations are particularly important.

Unfortunately, many state laws that automatically revoke an ex-spouse’s interest under a will or a living trust upon divorce don’t operate the same way with beneficiary designations. That means if your client dies after a divorce but before updating 401(k) beneficiaries, the ex-spouse could walk away with the savings. 

Before changing beneficiary designations to the children, help your client understand the impact of the SECURE 2.0 Act on inherited individual retirement accounts (IRAs). With the elimination of the “stretch” inherited IRA for most beneficiaries other than spouses, your client may want to consider researching alternative planning arrangements or donating retirement assets to charity.

Though clients nearing the end of a divorce may not be thrilled at the prospect of more to-dos, they'll likely appreciate your support. By discussing the considerations described above, you can help clients turn the page and begin a new chapter with confidence.