For financial advisors, rumors of Tom Brady’s and Gisele Bündchen’s divorce can serve as a reminder of the challenges high-net-worth couples face when separating their financial lives. Conversations about asset division may be easiest broached when clients are still married (or engaged to be married), and it’s wise to make sure both partners are involved in the financial-planning process. SmartAsset spoke with Alan Plevy, a family law attorney and mediator at SmolenPlevy, about what advisors should know.
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How Assets Are Titled Matters
Your clients may not have a whopping $650 million in combined wealth, including multimillion-dollar properties in New York, Miami, Montana and other locations like Brady and Bündchen reportedly own. But that doesn’t mean they shouldn’t practice good financial housekeeping when it comes to titling assets.
Keep an eye on how assets are titled – individually, jointly or in a trust, for example.
Couples and their advisors should remember that a piece of property held separately before marriage can become a marital asset, Plevy says. And they may not be pleased when they realize that a soon-to-be ex-spouse has a claim on an asset during the course of a breakup.
Get It in Writing
Like many couples these days, Brady and Bündchen entered marriage after experiencing years of individual financial and professional successes. They may have come into the relationship with their own high-value assets, investments and savings.
High-net-worth clients should consider formalizing and categorizing asset ownership via a prenuptial or postnuptial agreement.
“When you’re getting along great, that’s when it’s somewhat easier to get these things done,” Plevy says.
Estate Plans Can Change
Couples enter marriage with all sorts of complicated situations. Brady, for example, has a son from a previous relationship and two children with Bündchen.
Divorce is a wise time to encourage high-net-worth clients to revisit their estate plans. They should also update any beneficiary designations on investment or insurance accounts.
Keep in mind, too, that complex family situations can complicate estate planning. For example, Plevy says, a couple may have verbally agreed that a spouse could live in a house until her death. But when her husband dies, she may find that adult children actually have a claim to the property and she needs to exit within 30 days.
Eye the Art Collection
Ultra-high-net-worth couples such as Brady and Bündchen may own valuables outside of mansions and investment accounts.
Consider the additional challenges involved in appraising and dividing rare art, classic cars, high-priced antiques and other heirlooms. Who purchased the collectible, the money used to purchase it and the names on the receipt may come into play. After all, you can’t cut a Jackson Pollock painting in half (even if nobody would notice the difference).
Engage With Both Partners
The Brady-Bündchen divorce is a good reminder for clients and advisors that no couple is safe from the potential dissolution of their marriage. Both clients should be engaged in the financial-planning process.
While there haven’t been charges of financial infidelity in the Brady-Bündchen divorce, it’s a good reminder that clients should keep an eye on red flags such as credit card abuse, Plevy says. They may want to consider regular credit checks, which they can run for free, and keep up-to-date on the accounts generally.
Bottom Line
Divorces are difficult, even when the couple is exceedingly rich, successful and attractive. “These folks are not really any different than you and I or other people in getting divorced,” Plevy says. So, while Brady and Bündchen may be dealing with a level of fame and wealth outside the norm, advisors can take away some lessons from their breakup.
Tips for Growing Your Financial Advisory Business
- Let us be your organic growth partner. If you are looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform. We match certified financial advisors with right-fit clients across the U.S.
- Expand your radius. SmartAsset’s recent survey shows that many advisors expect to continue meeting with clients remotely following COVID-19. Consider broadening your search and working with investors who are more comfortable with holding virtual meetings or spacing out in-person meetings.
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