If you are facing separation or divorce, you will likely benefit from some early expert advice, even before filing. I recommend securing the counsel of an experienced, board certified family law divorce attorney, as well as the expertise of a Certified Divorce Financial Analyst (CDFA) -- and here is why.
Most divorce attorneys and their in-house teams offer clients a review of assets and debts in an effort to help them determine a settlement proposal. Yet, legal teams rarely have specific training with regard to financial issues. And let’s face it, today’s financial landscape for most couples and individuals can be complex.
For example, a dollar of value in the family home doesn’t necessarily translate equally to a dollar value in a pension plan. That's because while a home provides shelter, it also requires you to invest in maintenance. A pension may not provide any benefit until age 65, but it will likely grow in value. Evaluating assets from all angles is important in a divorce settlement.
If you and your spouse have 401(k) accounts, pension plans, stocks and bonds, a home or second home, valuable personal belongings, real estate, stock options, a family business or other investments, calculating the short-term and long-term value of these assets, and how to divide them fairly and equitably, takes financial knowledge and expertise. There are also tax benefits and liabilities to consider.
Certified Divorce Financial Analysts are specially trained in the areas of divorce laws, financial planning, budgeting and tax laws with regard to divorce. Many are also divorce mediators.
Did you know?
• The division of marital assets in Texas is rarely 50/50;
• Custodial parents of minor children may want to stay in the family home for their benefit and continued stability, but it may not be financially feasible;
• Determining which assets and debts are legally “separate property” and which are “community property” sometimes surprises couples;
• Calculating the “community interest” in a spouse’s pension plan in today’s dollars is important in a fair settlement;
• Finding all the assets and debts of both spouses can be difficult and often requires specialized financial skills;
• Continued health care coverage for both spouses and minor children should be factored into the settlement;
• While Texas doesn’t have mandatory alimony in most cases, there are provisions for “spousal maintenance” in certain situations.
Couples are often challenged by the divorce process and even more confused by the financial aspects of the settlement agreement. CFDAs can help take the mystery out of the numbers and assist spouses avoid long-term financial pitfalls of an inequitable settlement. Many couples can also benefit from developing a post-divorce budget with the help of a CFDA, thinking through income levels and monthly expenses, before a settlement proposal is developed or accepted.
Involving a CDFA early in the process can also save couples time and money. With mediation now being required in divorce cases by Texas family law courts, CDFAs can help attorneys and spouses reach equitable and fair settlement agreements even during the mediation process, thereby avoiding court altogether.
Join Patricia Barrett at her upcoming 2014 Leisure Learning class on June 30, 6:30 – 9:00 p.m. 2900 Richmond, Houston. She will also be presenting at the Guide to Good Divorce seminars in Houston on July 26 and Sept. 27, 2014. For more information on divorce financial planning or divorce mediation, visit Patricia's website, Lifetime Planning.