Case Study: Divorced Woman

Judy was recently divorced. As part of her divorce settlement she received half of her husband’s 401k savings ($650,000), the house they lived in (valued at $2.5M), and a cash settlement of $750,000. In addition Judy would receive alimony for the next 10 years.

Judy had a myriad of concerns coming out of the divorce. Her husband had the relationship with the financial advisor, accountant, and estate planning attorney and she didn’t feel comfortable using those same professionals. Judy’s accounting was complex due to the divorce and the alimony. She had several brokerage accounts that came from the divorce settlement. She still had her ex-husband named as beneficiary on certain documents and had him listed on her health care directive. Judy had no idea what her budget would be since she was used to budgeting for two. She was tired from a long divorce process, unsure of her future, and disillusioned at the process. Finally, one of Judy’s friends suggested she call Fluent.

Fluent quickly identified a couple of other issues that needed to be addressed. Judy’s assets were in very risky securities, thanks to her husband’s proclivity for picking stocks. And not only did Judy not know what her expenses would be; she had no idea how long her money could last her.

The first thing Fluent did was to assure Judy that everything would be OK. Fluent has dealt with this same situation numerous times, all with positive outcomes. Next we suggested that the tasks be organized by importance. Fluent suggested that first she should remove her husband as beneficiary on her accounts and establish a new trust. Working with an estate planning attorney, Fluent helped to change the title of Judy’s brokerage accounts, her beneficiary designations on her IRA and life insurance, the title on her house, her healthcare directive, and create a trust to give her assets to her two grown children. We were able to organize and complete these tasks with minimal input from Judy.

Next we recommended that Judy meet with an accountant. Since she was in need of a new accountant Fluent suggested one. This accountant is a specialist and can help Judy easily organize her taxes. With her estate plan in place and her taxes up to par, Fluent next moved to financial forecasting.

One of Judy’s biggest concerns was whether or not she was going to have enough money to live on for the rest of her life. By taking the house in the divorce she took a large portion of her money in an illiquid asset. By making assumptions about return, inflation, spending and income Fluent was able to illustrate with clarity Judy’s future cash flow. This information allowed us to determine how much Judy could spend and not outlive her money. Armed with this information Judy felt relieved to know she would not run out of money.

In order to secure the outcome that was predicted, Fluent needed to invest her assets in a manner that would produce those results. But first we needed to gather all her assets from the various brokerage accounts. Fluent transferred assets and combined accounts so that Judy now only had two accounts to keep track of. Fluent then determined the proper risk profile for Judy and constructed a portfolio that was as conservative as possible to create the highest probability of reaching her goals. Using modern portfolio theory, the portfolio was broadly diversified in multiple asset classes in order to reduce risk as much as possible.

In a very short time, Fluent was able to help Judy organize a lot of complex issues and moving parts. Fluent was able to simplify Judy’s life by managing the disparate areas of financial planning and bringing them together into one comprehensive plan. With her estate planning finished, her accounting organized, and her retirement now secured, Judy was free to enjoy her life once again, armed with the knowledge that every aspect of her finances was being maximized.

Fluent Wealth Partners, LLC
1530 The Alameda #115
San Jose, CA 95126

Phone: 408-217-2000
Toll free: 866-630-7583
Fax: 408-217-2011