This blog post is from Ronnie McClure, a collaboratively-trained financial professional and mediator located in Lewisville, TX. He holds academic degrees in economics, accounting, taxation, family counseling, and conflict resolution, and is a certified public accountant and a nationally certified counselor. He is a member of the American Counseling Association, the International Association of Marriage and Family Counselors, the Collaborative Law Institute of Texas, and Denton County Collaborative Professionals, where he serves as vice president. He currently serves on the Advisory Council of Communities Foundation of Texas and the Governing Board of the Dallas Estate Planning Council.
Divorce is one of the most traumatic events of a person’s life, and I advise that financial professionals assisting one or both spouses involved in divorce recognize the emotional stress the clients are experiencing. The most difficult impasses in divorce are based on unresolved emotional issues, usually driven by financial considerations faced by the less financially empowered spouse. Clients are also frequently emotionally attached to specific assets, often far beyond the monetary value of those assets. Whether it’s the home, a retirement plan, a business venture, or “toys” that shout “success,” financial advisors need to realize this emotional attachment and, if necessary, help their clients separate the emotional attachment from the financial aspects of the assets. It is also important to recognize that the husband and wife in a divorce are seldom at the same emotional level at any given point, and that they will respond differently to the financial issues they are confronting. Clients have very different agendas and time frames for the process of divorce. It is very important that financial professionals working with these couples seek out and understand their needs, desires, wants, and aspirations, and the underlying reasons for them.
The primary emotion these people are experiencing is grief. Other emotions associated with grief are fear, loneliness, guilt, pain, and anger. The practitioner working with clients in divorce must not dismiss these emotions.
Financial professionals must realize that couples in divorce are at their worst – interpersonally, cognitively, financially, and in their ability to problem-solve. People are not at their best in any lawsuit situation, especially a divorce. Married couples commonly do not completely share financial information or work together toward shared goals. A couple’s lack of willingness to communicate fully and openly about financial issues becomes even greater in the process of divorce. A financial professional’s task is to recognize that their clients are grieving, and to appreciate how to help their clients gather information and make sound financial decisions while being in various stages of the grieving process.
Clients can, and should, ask many questions concerning their financial situation during the process of divorce. Fear of the financial unknown is probably the most significant emotion a client will express. The financial professional’s task is to transform the “unknown” to “quantifiable.” Client questions typically include past and new financial aspirations, the degree to which the couple is in debt, financial needs of children, division of future income and their property, disposition of the marital residence, and tax issues. Financial professionals must assure their clients that they are familiar with the all of these issues and will address each of them during the course of the divorce.
There is typically a financial power imbalance among the parties. One of the parties frequently controls the couple’s financial matters, leaving the other spouse financially disempowered. Financial professionals must assure their disempowered spouse that the professional will help educate the client as to the couple’s financial situation and mitigate the immediate imbalance in financial power. Knowledge empowers a client’s decision-making. Assuring clients that the financial professional will fully assess the couple’s financial position will facilitate establishing a financial power balance between the spouses and ease the financial fear that necessarily comes with divorce.
Clients typically have many shared interests (children’s needs, some degree of financial security for each spouse, maintenance of the marital residence, etc.) Identifying the shared interests facilitates moving through the grieving process by identifying early in the process those things on which the couple agrees. Then the financial professional and the client’s legal counsel can focus on the more contentious issued on which there is disagreement.
It’s also important to remember that couples have both short-term and long-term goals and interests. It is important to first focus on the short-term needs, to enable the client to feel empowered and safe in making financial decision during the divorce process.
But it’s also necessary to awaken clients to the fact that their lifestyle is going to change as a result of divorce. This is an indication of the denial stage of grief. The finite pool of resources and income simply has to be spread over a broader range of expenses, such as the cost of maintaining two households.
The bottom line is that divorce is a highly emotional event, in which people grieve the loss of their relationships. Financial fear in divorce is very real, and dealing with that is extremely important to each of the spouses. The collaborative law team must be prepared to address these important emotional issues.
