Divorce Financial Planning
COMMON FINANCIAL MISTAKES
- Making emotional decisions rather than thinking strategically about your financial future.
- Making financial decisions piecemeal instead of taking a comprehensive approach.
- Agreeing to a settlement without understanding the financial impact.
- Misunderstanding that in property division equal is not always equitable.
- Keeping a residence you may not be able to afford.
- Disregarding the impact of taxes and transaction costs when evaluating settlement options.
- Misunderstanding the financial consequences of spousal support, child support, and family support.
- Failing to guarantee support payments prior to the final settlement.
- Failing to develop accurate budgets and a post-divorce financial plan.
- Overlooking the importance of protecting your credit.
There are three dynamics involved in every divorce – legal, financial, and emotional. Divorce attorneys focus on the legal issues, not necessarily the financial strategy. Divorce Financial Planners analyze personal and business financial issues, as well as the tax implications related to divorce, and formulate innovative strategies to help individuals achieve a favorable settlement aligned with their personal objectives. When legal and financial professionals work together to develop comprehensive solutions, it can reduce the level of emotional stress often associated with divorce.
Unlike most financial planners, experts in Divorce Financial Planning are accredited as Certified Divorce Financial Analysts and have specialized training in the financial intricacies of divorce, making them uniquely qualified to offer strategic guidance to attorneys and their clients.
Divorce Financial Planning includes the following:
- Identify, collect, and organize the financial information you and your attorney will need
- Create detailed pre- and post-divorce budgets
- Prepare Schedule of Assets & Debts and Income & Expense Declarations
- Develop Cash Flow and Net Worth projections
- Analyze and project spending patterns – illustrating any disparities between the two parties’ pre- and post-divorce lifestyles
- Analyze various settlement options
- Testify as an expert witness
- Devise and evaluate “What-if” scenarios for support and division of marital property (such as, what if your ex-spouse becomes disabled or dies – how is your settlement affected?)
- Develop financial models to illustrate immediate and long-term financial consequences and tax effects of proposed settlements
- Provide attorneys with comprehensive reports and tools for settlement negotiations
- Develop creative options and financial strategies to achieve an equitable settlement
- Review insurance coverage and estate plans
- Analyze equity-based compensation (stock options, etc.)
- Educate clients so they fully understand the implications of financial decisions