Navigating A Divorce? Get Professional Financial Help

Finances Divorce Expert: Jo Ousterhout

If you’re contemplating divorce, you probably know you need a divorce attorney.

Providing Expert Advice:

Life is complicated, and divorce makes it more so. In almost all divorces, hiring a lawyer is a smart move. Your lawyer will help you navigate the legal tangle surrounding divorce. They will provide expert advice and help to arrive at a settlement as quickly and smoothly as possible.

“Do not discount the benefit of having your lawyer function as a helpful, non-emotional proxy for you.”

Although, it can look tempting to try to do a divorce on the cheap with “do-it-yourself”. Prefab divorce kits are available on the internet. However, divorce is certainly one instance where you get what you pay for.

5 Good Reasons To Hire A Divorce Attorney:

Most women will be much better off by hiring an attorney. And the cost will more than pay for itself in terms of time saved and mistakes avoided. Here’s a short primer listing five good reasons to hire a divorce attorney.

And by the way, hiring a lawyer does not mean that your divorce will result in TV-show-type drama. Do not discount the benefit of having your lawyer function as a helpful, non-emotional proxy for you, especially during negotiations (even during amicable divorces) that can become heated.

Money – Biggest Stressors In Life:

So you’re OK with hiring a lawyer. And you may be thinking that a lawyer is expensive enough, and you don’t need or can’t afford any other experts. Here are some reasons why it may be beneficial to hire additional experts.

Money is one of the biggest stressors in life. Divorce can compound this stress for anyone, and this is especially true if, like many women, you do not have a comprehensive and thorough understanding of your and your spouse’s individual, and joint, finances.

Because divorce can be the single biggest event of your financial life, you need a financial professional as a member of your divorce team. This article is an entreaty for you to seriously consider having a financial professional as part of your divorce team, and to explain why it makes sense.

I have an MBA in Finance and worked on Wall Street for 20 years, and I would hire one – even with experience and practice in the personal finance world, I’d want the unemotional professionalism of an expert as I was considering settlement options.

Family Finances:

Just at a time when you are in the midst of all the practical and emotional issues involved with starting a new life, worrying about the ramifications of divorce on your relationships with family and friends, the impact on your livelihood, your home, etc., you also need to be focused on your future financial life.

“Stress impairs our ability to make good decisions.”

This can be daunting, especially if you have not been involved in the family finances until now. All jointly-held and personal assets will need to be tallied, valued, and divided, with the goal of an equitable settlement.

(You may feel that this will be easy as you read this sentence, but it most often is not. The tax implications alone can be quite detailed and complex. For a good synopsis of the services you might need help with during your divorce, read this article.)

And what is an equitable sharing of assets anyway?  A 50-50% split based on today’s market value of your various holdings may or may not be the best answer. (Here’s a real-life example.)

Make Good Decisions:

You need data about how the decisions made during the divorce proceedings will affect your (and your ex-spouse’s) financial future. Stress impairs our ability to make good decisions, so trying to analyze potential decisions in a rational, clear-headed way can be difficult during the emotional tumult of a divorce.

Many women throw up their hands at some point during the process and say something to the effect of “Whatever; I’ll accept this offer, let’s just get this done” without a thorough and objective analysis of their current and future needs. I’ve seen too many women financially penalized by divorce, by settling for a division of assets which is not equitable and does not serve them well.

Here’s a good example showing the benefit of hiring a financial professional as a member of your divorce team. Take time to read the entire article – it’s worth it. The case study is at the end.

“Let’s distinguish between some common financial professionals: Accountants, Financial Planners and Certified Divorce Financial Analysts.”

Professional Financial Assistance:

So now you’re convinced to add professional financial assistance to your divorce team, correct? Good!

What type of professional do you need? Let’s distinguish between some common financial professionals: Accountants, Financial Planners and Certified Divorce Financial Analysts ®::

Accountants:

Accountants typically analyze present-day situations. In a divorce case, they may help analyze the short-term effect of a certain division of assets or income, often with a focus on the tax implications. Typically, however, they do not do forecasting or analyze alternate future scenarios.

Accountants may go by any of the following designations: Chartered Accountant (CA), Certified General Accountant (CGA) or a CPA (Chartered Public Accountant).

Assumptions About Future Income:

Financial Planners:

Financial Planners: Certified Financial Planners® (CFP®) or Chartered Financial Consultants® (ChFC®) help clients develop a plan to achieve financial goals, starting with an inventory of present assets.

Assumptions about future income, expenses, interest rates, tax rates, inflation, etc. are made and used to project and analyze whether and how these goals can be reached. CFPs® and ChFCs® may also work with divorce cases, and many also have the CDFA® designation.

Certified Divorce Financial Analysts®:

A Certified Divorce Financial Analysts ® (CDFA®) helps you and your lawyer evaluate the impact of financial settlement options on your immediate and long-term financial future. A CDFA® will perform a comprehensive “what-if” financial analysis for you, incorporating budgets, tax effects, pensions and retirement plans, cost of child support, and more.

“Ask your friends, your divorce attorney, and/or any other professionals you trust for recommendations.”

Any of the above professionals can, if necessary, testify on your behalf as an expert witness in court or in mediation (which your lawyer cannot do).

Hire A Financial Team Member:

Cost? Expect to be charged by the hour, at a rate heavily influenced by your location. (Current hourly rates for CDFA® are likely in the range of $150-$400/hour, but remember that this can vary widely.)

Don’t be penny-wise but pound-foolish here – the several thousand dollars investments to hire a financial team member will likely be repaid multiple times over by the additional amount you will gain in the eventual settlement.

Trust For Recommendations:

How do you find the individual that’s right for you? Ask your friends, your divorce attorney, and/or any other professionals you trust for recommendations. You can also search the internet for any of the professional designations to find lists of relevant professionals in your area.

And then, just as you would before engaging any other professionals, conduct interviews with the ones that seem most suitable. You want someone who has the requisite knowledge of course, but you also need someone you trust and with whom you feel comfortable. For the best possible outcome, you will want to share a lot about your life, hopes, and dreams with them.

7 Helpful Interview Questions:

Below are some helpful interview questions. (For a more comprehensive list, go here.)

1. How long have you been practicing as a CFP®/ChFC®/CDFA®?
2. Have you ever worked with (my attorney)? If yes, tell me about that.
3. Have you provided expert witness testimony and previous cases? If yes, when was the last time?
4. What do you charge for your services? On what is that based?
5. How do you interact with your clients, and how frequently? May I see a sample of the type of plan you provide to your clients?
6. Do you have any references from previous contacts clients that I could contact?
7. What do I need to provide you to get started?

Move Into Your New Life:

After the interviews, take some time to compare the people you spoke with and their answers to your questions. Who seemed most professional? With whom did you have the best rapport? Not all Certified Divorce Financial Analysts are made the same, choose carefully.

Who seemed to get the best settlements for their clients (best meaning the one which aligned most closely with what the client wanted and needed)? Settle on the person or firm you prefer, sign a contract, and begin!

Big Step:

Be honest and brave as you move into your new life. And, above all, congratulate yourself for good self-care – you have taken a big step towards providing yourself with the best possible life!

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An important note: This article was written for illustrative purposes only; it simplifies, for the sake of brevity, a complex process. Every divorce is different, in terms of the personalities and relationships of the divorcing couple, the amount and types of assets to be divided, tax implications, if any, and relevant state law, among other factors. A Certified Divorce Financial Analyst may help make the process smoother and the outcome more palatable.

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