In a collaborative case, parties often engage a financial neutral to help work through the financial questions. Specifically, financial neutrals gather the necessary materials, establish a baseline for analysis, compile reasonable budgets, and run scenarios. Importantly, financial neutrals often work with the couple alone, without attorneys. This cuts down on costs but also confirms that both parties are equally involved in the financial decisions needed for the divorce. Financial neutrals then provide the attorneys with a set of all financial materials so there is no duplication of efforts.
There are two main areas of financial decisions that need to be made.
First, the parties need to decide on property division. After compiling a balance sheet of everything the parties have, the Financial neutral and parties pull out non-marital assets. Then the parties work through the assets and liabilities together with the financial neutral trying to decide on a mutually acceptable, equitable division. The financial planner can help equalize the division as needed and can help make apples-to-apples comparisons of retirement assets or other investments. The financial neutral can also help value automobiles or other personal assets.
The second area of financial decision is cash flow. This is a forward looking analysis including child support and spousal maintenance. A financial planner often starts this process by gathering reasonable and accurate monthly budgets for each spouse and the children. Scenarios can then be run to look at total income coming in and how to best allocate the resources moving forward to try and meet everyone’s needs. A financial planner can help consider the tax implications of these decisions as well as consider the benefits of claiming head of household status for income taxes.
Once the financial information is gathered and scenarios have been run. The parties and financial neutral can meet with attorneys to consider the legal implications of decisions and how to best move forward. The work that the financial planner has completed created the foundation for drafting the financial agreement. A good financial planner acts as an expert for both spouses as well as a mediator and guide through important financial decisions.
Financial neutrals have different certifications. Often they are CPAs (Certified Public Accountants) or CFPs (Certified Financial Planners). Most significantly, however, financial neutrals often have additional certification as CDFPs (Certified Divorce Financial Planners). This additional training prepares the attorneys to specifically address the financial issues that come up in divorce – like property division and tax consequences of spousal maintenance.
Contact Kimberly Miller to learn more about how a financial neutral can assist you in your divorce.