A Lack of Financial Clarity During Your Divorce Leads to Disaster!
In this article I am going to show you how to arrive at a mutually beneficial outcome for your divorce, reduce the cost of it, reduce the time it takes to get one, save your kids, and reduce your stress. The goal is to come up with a fair and equitable settlement by quantifying and visualizing proposed settlement offers thereby becoming an empowered decision maker.
Arrive at a mutually beneficial outcome
So how do you arrive at a mutually beneficial outcome? It begins with having the right mindset about this. You have to assemble a team of experts (attorney, Certified Divorce Financial Analyst™ and a mental health professional) to help you get through this difficult time and obtain the benefits listed in the introduction. Doing it any other way is a mistake.
Gaining complete clarity about your financial picture is the key. You have to have all of the details because the devil is in the details. How can you make an informed decision about a settlement offer without having complete clarity of the outcome? The simple answer is you can’t and don’t let anyone talk you into thinking otherwise. You have to have a detailed analysis of where you are currently and then look at any settlement offers you are proposing to your spouse or ones they have submitted to you. This includes the tax ramifications.
Often times most of the divorce planning that I know of is done during mediation on a yellow pad and a white board! That is a total waste of time and money. Everyone is “winging it” with the hopes that you come to an agreement only to regret it later. Tax mistakes are often made resulting in an unfair settlement. Do not become a victim of this kind of planning.
Other mistakes include and not limited to: keeping the house and later discovering that you can’t afford it, structuring alimony improperly causing you to pay unnecessary taxes, relying on financial advice from friends and untrained professionals (CPA and financial advisors including Certified Financial Planners, insurance salesman and stockbrokers) who mean well and are not specifically trained in divorce financial planning, missing “hidden assets and income” that are an essential part of the divorce analysis, marital and premarital assets and the growth of them, the real value of a pension as an asset, who should keep which assets and debts, factoring in social security income, an accurate lifestyle assessment for each party, executive perks including the value of sick pay, unpaid vacation and stock option valuation, not knowing what the business is worth, not determining the need and the ability to pay alimony, unrealistic goals, not analyzing the financial and tax impact of drawing on retirement assets to support current income needs, and many others.
What you don’t know will hurt you financially. So insist on getting the answers to all of your questions.
A Certified Divorce Financial Analyst can work with your attorney and come up with forecasts of how your net worth and income will look net after taxes under various "what if" scenarios. They can help you choose what assets to keep and ones to let go of. In other words, they forecast the future value of assets (based upon realistic assumptions) and income and see what life may look like for you financially after the divorce is over in advance. They can help you avoid unexpected future tax liabilities from assets you accept. You can base your decisions on objective, accurate financial data and not on guesswork or vagueness.
Reduce the cost of your divorce
The average cost of a mediated divorce is less than $7,000 and $20,000 for a collaborative divorce and a whopping $78,000 for a drawn-out litigated one.*
The above costs do not include opportunity costs. That is the cost for having to “spend” time preparing for your divorce and going to meetings
A professional making $200 per hour is going through a litigated divorce that is being dragged out over a one-year period of time (modest amount of time in reality). He/she has put 50 hours of their time towards it. That equates to $10,000 that was “lost” because they were involved in their case when they could’ve been earning that money. Most people overlook this. Another common problem is that you can't make any financial decisions with the consent of your spouse. I live in Orlando, Florida and watched the value of houses decline substantially. People who were in dragged out divorces "lost" a lot of equity in their homes during that time. This could have been minimized.
The traditional divorce on average takes approximately two years to complete. Two years of being stuck in “no-man’s land” without any control of your situation - month after month of being in fear, having anger, regrets and anxiety. It doesn’t have to be that way. Your team can help you move quickly and efficiently through your divorce and get you out of your “pain and anxiety” by providing you with a clear picture about your finances so that you may make informed decisions about your financial future and move on with your life. Often times this may be done within three to six months depending on the complexity of your finances.
Save The Kids
By helping you gain clarity about your financial future, you will move quickly and efficiently through your divorce without using the kids as a bargaining chip that happens too often in traditional divorce cases. Don’t underestimate what they hear, know and feel.
Reduce Your Stress
Take the “mystery” and the fear that accompanies it out of your financial picture. Gain complete clarity about your finances in plain English. Having this newfound clarity will empower you so that you can make informed decisions about our financial future. You will gain peace of mind by utilizing your team’s expertise that will deliver that clarity.
There is a right way to serve a tennis ball and a wrong way. There is the right way to hit a golf ball and a wrong way. The same can be said about getting a divorce. Working with the right team is the right way to go. Be smart about it.
Having a team in place as mentioned above may sound very expensive yet in the long run had proven to be less expensive. Your team may find hidden assets, save you taxes, prevent you from making financial errors that could cost you dearly, and save you a lot of time, which is money.
*Source: Collaborative Divorce Could Be Society’s Wave of The Future by US News & World Report dated June 13, 2008.