Because divorce affects people’s lives psychologically, legally and financially, the assistance of several different professionals has become a vital component of the divorce process. For instance, a qualified therapist provides important assistance to an individual during this difficult emotional time, while an attorney can create the necessary decree, as well as file documents with the court.
But during the entire process, a Divorce Financial Analyst has the training and experience to guide couples through the difficult financial decisions that may affect their livelihoods after the divorce. To qualify for this responsibility, Certified Divorce Financial Analysts have studied divorce in their state, tax issues for divorce, as well as financial planning.
Steps in Financial Planning for Divorce
Divorce Financial Planning provides assistance with one or more of the following:
- Reviewing financial documents submitted by the spouse. These are frequently complicated and require a certain level of expertise in finance.
- Creating a spreadsheet to divide the marital estate, considering your individual situation, and adjusting for taxes when needed.
- Helping to create a budget for the post-divorce lifestyle.
- Guiding you to estimate your children’s needs and expenses over the coming years.
- Estimating your taxes for a) the year of divorce, and b) for the first year post-divorce. This can involve educating you about tax credits that may become available to you as a single parent. It is also useful to estimate a husband’s taxes both with and without alimony payments in order to illustrate the substantial tax savings.
- Creating a spreadsheet to look at the coming 20 years, bringing in expected assets, the budget, the taxes, income, and other items. This is where Divorce Financial Planning becomes a roadmap to the future and to decisions on asset division, budgeting, home purchase or sale, retirement, and other issues.
- Educating you concerning medical insurance options for post-divorce.
- Looking at the college funding situation and how it is affected by the divorce; who should be responsible; what options are available for funding.
Your attorney is trained in law and knows the statutes for the state of Texas. He is not, however, trained in Divorce Financial Planning. In fact, most attorneys avoid giving any financial planning advice due to the liability of offering advice in an area for which they are not trained. For most attorney practices, you will be largely working with his paralegal or assistant, who is unlikely to have any training in financial planning, either.
Your Guide in the Divorce Process
Patricia becomes your guide as you work out a settlement, as you choose assets to receive post-divorce, or plan your new life. She has the skills and expertise to ably guide you with her financial planning tables and advice, and is easily accessible by phone or email.
The Divorce Financial Planning process begins with a phone call to Patricia to discuss your situation and, if appropriate, set up an appointment. After the initial consultation, if you choose to make Patricia part of your “team,” she will provide you with a questionnaire to guide you in gathering documents and creating a budget. If you have already done an inventory with your attorney, she can use that for the assets. If you haven’t created an inventory, it may be possible to use Patricia’s Financial Statement for that purpose, thereby reducing attorney fees.
After the questionnaire is completed and submitted, Patricia begins working to create your Divorce Plan, carefully entering every asset, calculating any tax adjustments, creating spreadsheets and turning the divorce into an understandable business-like procedure. She will communicate by email to clarify any missing items. Most clients feel a great sense of relief to see their assets, liabilities, budgets and taxes all mapped out clearly and concisely.
Patricia then arranges a meeting to review the plan, carefully noting any changes you wish to see in the tables. She will gauge the presentation to your level of understanding, slowing down for the financially naïve client, while moving more quickly for the financial sophisticated one.
When the plan is completed and shared with the attorney, it can be used in mediation to analyze any proposed settlement from the “other side.” Couples will be able to look at the long-term effect of the settlement on their future.
Cooperative or Collaborative Divorce?
If the divorce is a “Cooperative Divorce” or “Collaborative” one (see “Ways to Get Divorced”), Patricia will perform Divorce Financial Planning for both spouses, helping them look at the coming 20 years as they work to understand the ramifications of a proposed settlement. With her training as a Mediator for the state of Texas, she is able to guide couples to a peaceful settlement without allowing the legal system to embroil them in an extensive and expensive legal battle.
Attorneys are only looking at the assets as items to divide and are not concerned with the long-term effect. As an example of “Knowledge is Power,” a Divorce Financial Planner gives couples the additional capability to achieve a peaceful and intelligent settlement.