Rick Harkins and his wife, Michelle Cortes-Harkins, founded Harkins Wealth Management in 2008. Rick and Michelle began offering financial planning, but they soon began receiving an influx of referrals from divorce attorneys.
Eventually, they have split into two different practices: One that covers the wealth management side of things, and the other helping clients manage the many financial nuances of divorce. As the divorce aspect continued to grow, Rick and Michelle obtained a Certified Divorce Financial Analyst designation.
Now they are able to guide clients through the complex world of finances that inevitably come up during divorce.
Rick and Michelle recently joined DadsDivorce to talk about some of the financial challenges caused by divorce and what a person can do toward ensuring that divorce doesn’t wreck their retirement planning.
Can you run through some of the most common mistakes you see men make during the divorce process that ends up derailing their retirement plan?
Rick: Obviously it’s a very stressful time for both spouses going through a divorce. When they get stressed, they tend to just want things to be finished and sometimes what we find is people will give up maybe a little more than they should and that can be really detrimental to their retirement.
Michelle: When it comes to future retirement, you want to make sure you’re documenting if your spouse makes more money than you do, if you contributed to social security, and other things of that nature. All the different pieces that might make a difference on down the road need to be documented.
I think sometimes people look at the forms or the process and they’re just so overwhelmed and they’re like, “OK, I’ll just estimate them all. Which is usually not a good idea.”
Prior to filing for divorce, are there some steps that can be taken to make sure their retirement savings are protected and they can proceed with retirement as planned when they do actually divorce?
Rick: People definitely need to sit down and take a really clear picture of their debts, their income, their overall resources. … They need to be really clear and concise in making sure everything is up to date. That can simplify much of the process.
What about 401ks, IRAs and those kinds of retirement accounts. What would someone need to know about how those will be affected by a divorce?
Rick: A lot of times in the process, we find they just split things up 50/50 and that’s it.
But there are a lot of states that go into the equitable division of assets so it’s not always a 50/50 case. They’ll look at the details and the implications of splitting things up.
A lot of times with 401k plans and pension plans, a qualified domestic relations order comes into play – a QDRO – but they also need to be careful because a lot of companies accept the attorney’s drafted QDRO and sometimes a company has its own QDRO. There are also assets that can’t be split based on the QDRO so you need to take a close, educated look at it.
Michelle: When you have a retirement plan like an IRA or 401k, you don’t always just say, “OK, 50/50.”
Also, there are some retirement plans that can’t be divided that way. So if you have anything with the government or the military or anything like that you probably need to get somebody who specializes in that so you don’t make mistakes.
“The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual. Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.” Rick Harkins and Michelle Cortes-Harkins are registered to transact securities business with residents of the following states:: RI, MA, CT, FL, ME, NJ, OH, PA, NY, DE, IL, MI”