Financial advice can make

I was introduced to Jane through a referral from a local accountant. She had just been through an acrimonious divorce and needed help in planning for her future. Jane, in her 40s, had been a stay-at-home mom with two daughters in high school.

In the divorce settlement, Jane got to keep the house (with a large house payment), the furnishings and car. She also received half of her former husband's sizable retirement plan. These were the things that she wanted, but what she really got were nonliquid assets that could not be easily converted to cash. Since Jane had not worked in many years (although she had a college degree), it would take time to get her a good job. Jane planned to pay the bills for the time being with her half of her ex-husband's retirement plan. That too was not liquid and she would have to pay regular income tax on it plus a 10 percent penalty for early withdrawal.

She was in a tight spot. Still very angry about the divorce, she was not thinking straight about her and her daughter's needs. She would receive child support for the girls only until they turned 18. Besides, the child support was hardly enough to cover the large house payment, and that was due when she walked in my door.

I could plainly see that this was going to be a tough one. Jane did not get any cash in her divorce, could not liquidate the retirement plan without tax consequence and was adamant about keeping the house she had raised her daughters in. The house was a grand one and there was around $300,000 in equity. This was many years ago and that $300,000 could easily have bought another nice (but not as large) home in Carson City and she would have money left over to get her up to speed in the job world.

The balance in the retirement plan would have been a great nest egg for her own retirement as she still had many years left before turning 591⁄2 and no retirement of her own.

She wanted to start her own business. I was not too keen on this as her degree was not in business or management and I was concerned that this would take too much capital and involve too much risk. She was not convinced.

She took none of my advice. She kept the house, started up a small business with money taken from the retirement plan and used the IRA as her monthly income source. The result was that she could not make a go of the business and it closed, her house was repossessed and the IRA was completely drained in two years, leaving her with a huge tax liability and no way to pay it.

Why did Jane not take any advice? She was angry and full of resentment from the divorce and could not separate her feelings to make good decisions. The eventual outcome only made things worse and it was more difficult for her to move on with her life.

Even when people do go to financial planners, they do not always take advice. All the planning in the world is of no value unless the client implements that plan.

If you find yourself in a similar situation, keep a cool head. If you do not feel a connection to the financial planner that you are working with, then interview others. If you do not feel that you are getting good advice, get another opinion. I can practically guarantee that no two planners think exactly alike when trying to help a client, but just as ignoring the advice of your doctor can be costly, ignoring your planner, accountant, or attorney can be equally devastating.

For men and women thinking about divorce, first get good legal representation. A good and fair settlement is much easier on everyone if done right the first time. Second, consult an adviser and accountant, even if it is a one-time consultation, and listen to them. The people you involve in helping you get your life back in order can help you separate emotions, so use them as your buffers.

People can and do survive divorce and often find that they are happier after all is said and done. If you feel that divorce is your best option, consult and listen to the professionals you hire and you can have a better outcome than Jane.

- Carol Perry, a Northern Nevada resident since 1983. You can reach her at carol_perry@worldnet.att.net. or 267-5358.