When you are trying to reach a fair divorce settlement, you need to think about the future. What appears to be an equitable distribution of the marital assets and debts, may not be so fair in the long run. The following article points out some things to keep in mind when trying to reach an agreement, and how a Divorce Financial Analyst can help you see the whole picture.
After ten years of marriage, Dick and Jane are getting a divorce. Jane gets the house for herself and the kids and the SUV, plus alimony and child support for the two children. Dick finds a new bachelor apartment, keeps his car and agrees to the alimony and child support. Dick and Jane have a pretty typical divorce settlement and everyone feels the settlement is equitable and fair.
Fast forward two years into the divorce, the house needs a new roof, the SUV needs to be replaced and Jane can't afford either. She needs to go back to work to start saving for her retirement and the kids' college education. This brings income, but also more care, clothing and transportation expenses. Dick is fulfilling his obligations under the divorce. His career has progressed, his retirement account continues to grow and his lifestyle is improving.
What happened to this fair settlement?
It wasn't equitable and didn't look down the road to account for changes in needs and asset values. Now, more than ever before; working men and women are facing the long-term financial effects of failed marriages. Divorcing parties need to look forward when separating their assets to plan for their financial future.
Getting a clear picture of what's involved.
First, divorcing parties must recognize that, since they are emotionally tied to many of the assets to be discussed, they may need the help of an expert, such as a Certified Divorce Financial Analyst. A CDFA is professional who can work as a neutral financial expert. This advisor is invaluable when it comes to navigating through the personal issues associated with the asset division process and looking beyond the current settlement, giving each party a clear picture of the value of their assets today and tomorrow as well as their projected future financial needs and comparing the two, so that all parties' needs are met currently and in the long term. A CDFA can show you a projected outcome of your financial settlement, 5, 10, or 20 years down the road.
Being realistic about your finances
Second, divorcing parties must be realistic. They must attempt to represent their pre- and post-divorce finances accurately and in a legitimate way. Manipulating the facts will only serve to create an atmosphere of distrust and antagonism. This is not only counter-productive financially, but the effect on children exposed to feuding parents can be traumatic.
Facing the future
Third, parties need to gather their personal, professional, as well as monetary assets to help them face their financial future. Each person needs to take care of themselves physically and surround themselves with positive people. Women may need to get a job, or further their career by continuing their education, obtaining additional certification or simply letting their boss know that they are ready to tackle a position with more responsibility. Those job moves will most likely result in an increased income. Also, looking at assets as a complete financial picture will help each party to see where they are secure and where they need to make positive changes.
A CDFA can guide divorcing couples through this process of equitably separating their assets. Remember, the goal of a Certified Divorce Financial Analyst is to create two financially viable households to meet the needs of all the members of the divorcing family, today and tomorrow.
Article by Deborah Williams, a Certified Divorce Financial Analyst who works with Greenbriar Financial Services of Houston. Ms. Williams assists people going through a divorce to evaluate the financial implications and possible tax impact of dividing the marital property and debts, explore their various settlement options, and determine whether family support will be awarded and how much.
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