Finances and Divorce
A number of financial issues can arise when a couple decides to separate that can seem overwhelming at first. Some of the more common issues are:
- What will happen with the marital home?
- How will the assets and debts that have accumulated during the marriage be divided?
- What is the value of the marital property?
- How will the cash-flow needs of the two households be met, because it will be more expensive when there are two homes?
- Will there be child support and/or spousal support that will be paid by one spouse to the other and if so, how much will be paid and for how long?
- How will ongoing children’s expenses and college expenses be handled?
- What tax filing status will be used, and who will claim the child dependency exemptions?
- Will the parties retain each other as beneficiaries of life insurance policies for some period of time, and if so, how much will the benefit be and how long will that obligation last?
How Are the Questions Above Addressed in Collaborative Divorce?
In my Collaborative Divorce practice, we systematically address the above financial issues, along with many other financial issues, in four-way conferences among the spouses and their attorneys. Here’s how it works:
- Before our process begins, the two attorneys gather the relevant financial documents from our clients and make four copies of them.
- One of the agenda items of the first conference is to assemble the documents into four tabbed notebooks, so that the attorneys and our clients will each operate from the same pool of financial information. We also have a marital net worth spreadsheet that we fill out (using a big computer monitor) in the first conference that ultimately will provide the foundation for a discussion about how the marital assets and debts will be divided.
- Before the second four-way conference, I work with my client to develop a detailed projected budget, using a spreadsheet showing monthly expenses in a number of different categories. At the second conference, we fill out and show on a big computer monitor the cash flow spreadsheet. This spreadsheet will continue to be modified as we continue to gather more information and a better understanding of what the financial future holds for our clients. The cash flow spreadsheet also contains space to include information about the incomes of the parties, and we also take into account such things as the respective income tax brackets.
- After we have gathered this financial information, we begin to discuss at the third conference options regarding how the marital property will be divided. We also look at issues related to the available cash flow for the two households and discuss whether child support and/or spousal support will be paid by one spouse to the other.
- In between the conferences, I work with my client to answer questions about the financial issues, talk about options that work for him or her and that we think might work for the spouse, and prepare for the next conference.
- At the fourth conference, we usually are able to begin to put the pieces in place for a final resolution of the financial issues.
Certified Divorce Financial Analyst® Designation
After taking a series of examinations and completing a detailed case study, I was awarded the CDFA™ designation by the Institute for Divorce Financial Analysts. I obtained the certification to help me provide an additional level of insight as an attorney as I advise my clients, because often sophisticated financial solutions are required. Keeping the designation in good standing requires me to take fifteen hours of divorce-related continuing education coursework every two years.
Use of Financial Professionals
Each Collaborative Divorce case can be uniquely tailored to the needs of our clients. One benefit is the use of professionals who have been trained and have extensive experience in such matters as financial planning and the valuation of pensions and closely held businesses. The financial specialist role in Collaborative Divorce is as a financial neutral (meaning that he or she works with both the husband and wife and is not favoring one over the other), and the specialist has been specifically trained in collaborative divorce law proceedings.