Archive for March, 2016

Knowing Your Financial World Prepares You for Any Result

We were in a collaborative meeting with a couple and their attorneys as they were discussing the business assets from the marriage. The wife was frustrated with her husband’s lack of willingness to compromise. He was sure that the whole business was being manipulated to hide money.

We took a “time out” to talk about the need for understanding. While both sides had legitimate concerns and fears, they were both missing the key point. How can anyone make an intelligent or informed choice without a clear understanding of the facts?

Divorce is emotionally devastating to start with. If life-altering decisions are made in a fog it makes it even more fearful. That is why we emphasize the need for both sides to educate the other on the topic at hand. This is not a condescending discussion. Rather it is a respectful exchange of information in a way that both sides can understand.

The real question is, how can the other person know if they are being treated fairly if they do not understand the facts? By offering respect at the discussions, the need to fight over assets is reduced.

Education also eliminates the need to call the attorneys, which is typically a defensive move. Calling legal counsel runs up costs when the parties are trying to protect their assets. Professionals seeing divorce cases recognize that when couples work at educating each other, discussions are more productive. It saves money and helps the evolution of the relationship.

So, what do you need to know about and what should you be discussing? When it comes to assets, property and support, no one has all the knowledge about your situation better than you do. This includes judges, mediators, attorneys or every other professional.

First you need to accept responsibility for information, or the lack of information, and exercise patience with each other. If you are talking with each other the clocks of the professionals are not running (you are saving money). You each need to develop a way of understanding and keeping track of the finances. Share copies of account statements and learn what it takes to operate your household – yes, that means a spending plan.

Look at all your assets – everything you own – from cars to bank accounts to personal assets. Whose names are on these accounts? Who has access? How much is in each account? Were properties that you own obtained jointly while married or were these bought prior to marriage? You may need some help doing this. A Certified Divorce Financial Analyst (CDFA) may be a good resource to assist you. Typically the CDFA costs less than an attorney. Also talking things through with a therapist coaching the conversation can be enormously helpful in reshaping the dialogue and sentiment of the discussion.

Most professionals agree that a couple should work together for a seamless and peaceful divorce. That requires good communication. As noted at the opening, communication does not mean there’s love or romance for one another. It is the respectful exchange of accurate information. Understanding this definition carries a degree of respect in these painful discussions. Recognizing a need to be financially prudent and save money should be one aim for an uncontested divorce.

You are hurting. No one denies this is painful. Yet if the divorce is going to happen, isn’t it better to cooperate? Ultimately any damage done to each other is damage done to yourself, your finances and the family as a whole.

If a couple still finds a need to go to court, at least you can agree to avoid the extreme costs of the attorneys handling the discovery process. Even when there is a massive amount of assets and “money is no object” why turn those large amounts of cash over to attorneys?

A good example is Roy and Patty Disney. After a long marriage they filed for divorce in 2007. No big court fight. No big headlines. They took a quiet path of cooperation and a collaborative process. The massive fortune was divided and the couple parted ways. We had the chance to see Patty several years later with her family and to exchange an email with Roy before he passed on. They were both dealing with issues of life. But they were not bitter about the divorce… and the attorneys did not profit from a fight. They were paid for their time and effort and no more.

If you can agree, how do you start? There is a required disclosure rule in every county and state. This disclosure is a guide to what you need to gather. This is commonly called the financial affidavit which looks at income, living expenses, what you own (assets) and what you owe (liabilities). A typical list of documents to compile could include:

Federal/state/gift/intangible personal property tax returns from the last three years
Forms W-2, 1099 and K-1 from the past year
Three months of recent pay stubs
Specified loan applications, deeds and lease agreements
Bank account statements, including checking, savings and credit cards
Retirement plans
Life insurance
Deeds and loan documents

This is a start and it creates an atmosphere of being open. You may not love or even remotely like each other at this point. There is probably anger along with many other emotions. But maybe the one thing you can say about each other at this tender point is that you were honest with each other about the financial world you had together and how to share that as you separate and move forward with this new chapter in your life.


By: Armand & Robbin D’Alo