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Financial Considerations for Women in Divorce.

Divorce and widowhood are life-changing events that generally affect women’s finances more negatively and often than men’s. After the first year of divorce, the wife’s standard of living and net worth often drops while the husband’s often increases.

Coping Strategies for Financial Survival After Divorce or Widowhood are:

  • Can you continue to own and live in the family home? Sometimes the answer is yes and sometimes no. It is imperative to pinpoint exactly what it will cost to maintain the home, factoring in taxes and inflation. Keep in mind that owning the home does not pay your debt or living expenses. Certified Divorce Financial Analysts are trained to help people answer this question before they commit to a settlement that cannot be changed.
  • Plan for reduced income following widowhood or divorce. Almost everyone has to reduce his or her standard of living after a spouse’s death or after divorce. Establish a budget based on your income and expenses, independent of your spouse. In the case of a divorce, include income from spousal support and transferred assets, but remember, spousal support may not continue forever.
  • Require your ex-spouse to maintain life insurance to insure your support payments will continue in case of his death. This should be in your written divorce settlement and you should own the policy.
  • Don’t overlook the value of his future pension. The present value of that stream of income could be worth hundreds of thousands of dollars.
  • Take advantage of IRS regulations regarding retirement accounts. If the only asset is his 401k, and you need cash to pay bills, there are IRS regulations that would allow you to liquidate any part of your portion without penalty. However, the rules are strict and you should consult a financial professional to ensure that are proceeding correctly.
  • When preparing for divorce, save administrative fees by making photocopies of everything- bank account records, financial statements, investment statements, tax returns (including corporate), retirement and pension information, etc. During divorce, these items become difficult to locate.
  • Understand your benefits and research your options. The COBRA law allows you to continue health coverage from your husband’s employer, if there are at least 20 employees, for up to 36 months after divorce or widowhood. This, however, may not be in your best interest because if you develop any health issues, it will be more difficult and expensive to obtain your own policy down the road. If your spouse has worked and you have been married for 10 years or more, you are entitled to one-half of your spouse’s Social Security or 100% of your own-whichever is higher- even if you are divorced. Your spouse still retains 100% of his Social Security benefit. This is a guarantee and therefore it is not a negotiation point in divorce. Contact the Social Security Administration at 800-772-1213 to apply for benefits or with inquiries.
  • Consider the tax effects of settlement options before signing an agreement. The spouse who keeps the house may owe capital gains taxes when it is sold. An IRA or brokerage account may be worth less if you have to liquidate it.

  • Hire a specialized team!!!!
  1. Hire an attorney who specializes in divorce. Do not try to cut corners. You need sound legal advice to understand your rights and to be in compliance with the law.
  2. Hire a Certified Divorce Financial Analyst (CDFA) or Certified Public Accountant (CPA). CDFAs are trained to help people through the financial aspects of divorce. They analyze the financial issues, including income, assets, expenses, pensions, taxes and division of property, to help you reach a financially equitable settlement.

If you would like further information on this topic, please feel free to contact me by telephone at
201-655-7275 or via e-mail at

Melissa Thiemann Cannizzaro CDFA is Chief Operating Officer/Executive Vice President-Investments of Signature Financial Group, as well as a Certified Divorce Financial Analyst. Her office is located at
12 Rt. 17 North Suite 204 Paramus, NJ 07652

Published in Garden State Woman's Magazine September 2004

Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. 2007, 2008 & 2010 Broker Dealer of the Year, Investment Advisor magazine, Div IV. Investment Advisor Representative. Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Signature Financial Group are not affiliated.

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