What is Financial Transition?
Financial transition refers to changes in a person’s financial situation following a significant life event, such as the loss of a spouse, divorce, or business sale. These events often require a thorough review of current assets to assess how well they align with immediate and long-term financial needs. It may also involve developing a tailored asset allocation strategy and determining the best way to position assets to ensure a reliable income stream for the future.
Financial Considerations During Transitions
Business Owners
Many small business owners consider their business to be one of their greatest personal assets and, in many cases, the primary source of family income. Particular strategies to consider that can safeguard your finances during growth or after the sale of your business include:
- - Avoid gifting a growing business to children without the experience to manage it. Without proper guidance, a thriving business can quickly fall apart.
- - Protect your income stream after selling a business by taking proactive steps. Request duplicate premium notices to ensure the buyer keeps up with life insurance payments and plan for unexpected events that could impact their ability to meet financial obligations. This will help secure your future income, even if circumstances change.
Divorce
Whether you are considering a divorce or already in the throes of one, you will make financial decisions that will affect the rest of your life. A few strategies you can consider include:
- - If maintaining your home becomes too costly due to mortgage payments, taxes, or upkeep, consider downsizing or selling to reduce financial stress.
- Review and update your wills, trusts, and beneficiary designations on retirement plans and insurance policies to ensure they reflect your current wishes and circumstances.
- When dividing retirement plans, ensure you have the correct paperwork, like a Qualified Domestic Relations Order (QDRO), to avoid unnecessary tax penalties or complications, and speak with one of our qualified advisors
Illness
If you or a family member are living with a serious illness, you will face new challenges and decisions. Strategies to safeguard your finances before and after a diagnosis include:
- - Create a Power of Attorney to designate someone you trust to manage your financial affairs if you cannot do so.
- - Choose a health care proxy to make medical decisions on your behalf if you’ve been diagnosed with a serious or terminal illness.
- - Set up a trust to ensure your or your loved one’s assets are passed to your chosen heirs smoothly and without the delays or complications of probate.
Second Marriage
A second marriage brings a new chapter and some unique financial challenges. Consider the following strategies after saying “I do”:
- - Update your wills, trusts, and beneficiary designations to ensure everyone in your blended family is provided for according to your wishes.
- - Discuss finances and debt openly with your partner to understand how these factors might affect your decision to combine or share financial responsibilities.
Grief & Loss
Though there is expected grief after the death of a loved one, it may be more intense than you anticipate or last longer than you think. Things you can do include:
- - Take care of yourself. Not everyone experiences grief the same way, and it's important to give yourself space to grieve.
- - Avoid making decisions about money that may be intended for your financial security.
- - Avoid making decisions about finances without taking the time to think through outcomes and possible tax consequences.
Why Partner with AMG Wealth Advisors?
Our three accomplished women founders started AMG Wealth Advisors to empower women navigating challenging financial transitions. Whether you’re managing the financial complexities of a divorce, adjusting after losing a spouse, preparing for retirement, or making significant decisions like buying or selling a home or business, we’re here to guide you every step of the way. Our financial transition services in Austin are tailored to support your unique needs and goals, offering comprehensive financial planning, estate planning, risk management, and investment analysis. At AMG, we ensure every aspect of your journey aligns with your values and priorities, helping you move forward with confidence and clarity.
