Divorce is commonly seen as one of the most stressful experiences one will ever go through. Along with all of that stress, you are also making financial decisions that will most likely affect the rest of your life and perhaps the lives of your children as well. For that reason, it’s always a good idea to get the advice of a Certified Divorce Financial Analyst™ or some other financial professional during your divorce process. Having another set of eyes on your situation is always a good idea. Your attorney will give you advice on your legal rights during divorce, but your financial professional looks at asset division in a whole ‘nother way.
Here are the first 3 of 6 most commonly overlooked financial issues I’ve seen in divorce cases over the years:
4) Hiding Assets (attempting to hide assets)
Guess what. As divorce professionals, we have seen it all. The judges too. In this electronic age that we live in it’s next to impossible to hide assets, so it’s best not to even try. Divorce attorneys are experts in knowing what opposing spouses will try to do in order to hide assets, and if they can find the hidden assets, they can easily hire a forensic accountant to find the assets. Early in my career, I worked with a woman whose husband had their money spread out in 54 different bank accounts. We hired a forensic account to comb through 3 years of statements from all 54 accounts. After about 40 hours of work, the accountant was able to find $2mm that was unaccounted for.
Remember this. You are not the first one to get divorced. You are not the first one to think that you can out smart your spouse’s attorney, and you are certainly not the first one to think that you have thought of something that has never been tried before. Do yourself a favor and don’t even try. Especially since most divorce decrees include a statement that awards any hidden assets, once discovered, become 100% the property of the other spouse.
5) Dividing Assets One at a Time
I see this all of the time, especially when there is an engineer in the mix. One of the spouses will put together a complex spreadsheet on how they are going to divide each bank account in half, divide the college funds in half, divide the retirement accounts in half, and then either one spouse will buy the other spouse out of the house, or they will elect to sell the house and divide the proceeds in half.
This is not how we look at it. I like to look at the couples overall financial picture. Add up all of the assets and liabilities and figure out what constitutes the marital estate. Their Net Worth if you will. From there, we decide what kind of division is fair and then we try to award accounts in their entirety as much as we can. Ending with one large asset that is divided at the end to make up the difference.
For example, if one spouse gets the matrimonial home, the bank accounts, and the nicer car, then the other spouse might get the vacation home, the brokerage accounts and the not as nice car. After those divisions are made, we can balance the final division out by using the large 401k account allocated to BOTH parties and shoot for the division percentage we are looking for.
6) Not Considering Alternative Ways to Divorce
Divorce is a complicated process and you will want professionals to help you through it. However, it’s like the say. There is more than one way to skin a cat. Likewise, there is more than one way to divorce. One of those ways is called a Collaborative Divorce. Think of it as the opposite of a litigious divorce. In a collaborative divorce, the couple, along with their attorneys, a financial professional and a mental health professional, works together to figure out how to divide their time with the kids, and their assets, in a way that works well for all of the parties involved.
More importantly, after the divorce is over, couples who worked together to consciously uncouple make much better co-parents than those who fought about every little thing and spent a good chunk of their assets doing it.
To find out more, visit https://cdtpublic.wpengine.com and search for a professional in your area who is trained on the collaborative divorce process.
Securities offered through SCF Securities, Inc. – Member FINRA / SIPC. Investment Advisory Services offered through SCF Investment Advisors, Inc. 155 E Shaw Ave., Suite 102, Fresno, CA 93710 * (800) 955-2517. SCF Securities, Inc. and Austin Divorce Planners are not affiliated.