Please Be Seated: Divorce Is Now Being Served

Imagine a client you’ve known for years tells you they’re getting divorced. You want to set them on the right path, but where do you start? First and foremost, having a network of professionals (e.g., attorneys, relationship counselors, mediators) at your fingertips who specialize in this field is important. Remember, not all attorneys are divorce attorneys, and the legal system is not an easy one to navigate. You wouldn’t go to a dentist to perform open heart surgery, so neither should you go to a “generalist” to get divorced.

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    Please Be Seated: Divorce Is Now Being Served

    Please Be Seated: Divorce Is Now Being Served

    I am passionate about working as a Certified Divorce Financial Analyst (CDFA), where I’m able to provide in-depth financial analysis and advice to attorneys and couples during divorce proceedings. I chose this specific niche market because I needed to make a difference for individuals and families going through what is one of the most painful and confusing times in their lives. While the depth of expertise I possess may not be for all financial planners, it is absolutely information all advisors should know to provide trusted, value-added advice to their clients.

    Imagine a client you’ve known for years tells you they’re getting divorced. You want to set them on the right path, but where do you start? First and foremost, having a network of professionals (e.g., attorneys, relationship counselors, mediators) at your fingertips who specialize in this field is important. Remember, not all attorneys are divorce attorneys, and the legal system is not an easy one to navigate. You wouldn’t go to a dentist to perform open heart surgery, so neither should you go to a “generalist” to get divorced.

    In a traditional “litigated” divorce, each party has an attorney who goes to battle for their client(s). Frankly, this scenario almost never works out well for anyone. When a divorce action is filed, the clock starts ticking and the dollars start flying out of your clients’ accounts fast and furious. The tension mounts and, yet, it also seems like nothing is happening. This isn’t your imagination; litigation is a hurry-up-and-wait process. It isn’t unusual for someone seeking divorce to file today and get their first court date six to 12 months from now.

    Even in the best of times, litigation isn’t an ideal way to go. More than 90% of all litigated cases get settled out of court.1 Many who go through the process are surprised to learn that court is nothing like “Boston Legal,” “The Good Wife” or “Suits.” It’s real life, where the system is bogged down and cannot possibly handle the numbers of divorce cases coming across the docket. Nassau County in New York, for example, has only six assigned matrimonial judges out of nearly 2,500 divorce actions filed in any given year.2 How can six judges possibly keep up with the rising tide?

    There’s something else to consider in a divorce. If your client’s case does go before a judge, do you or they really want someone arbitrarily deciding who’s entitled to which of their assets? Fortunately, there are viable alternatives to litigated divorce: mediation and collaborative dispute resolution. These options are available in most states, cost considerably less money and take less time—yet few people know they exist. The beauty of these two alternatives is they keep the entire process out of the court system until the very end when documents need to be filed.

    During mediation, a trained mediator helps clients negotiate and come to terms specific to their circumstances and needs, draft a settlement document, and file necessary paperwork with the court. During collaborative dispute resolution, a team of professionals—including two attorneys, a financial neutral (either a CDFA or a Forensic CPA) and a family specialist—convene to help clients through the process. The team works together with the parties to achieve the best possible outcome using a wholistic, personalized approach, while keeping the overall mental, physical
    and financial health of the family top-of-mind.

    Attorneys know the law; they don’t know finance. Yet, the legal system asks attorneys to decide who’s entitled to what assets. As a financial advisor, this is where you step in to be your clients’ advocate. Speaking as someone who has been in the financial services industry for 30-plus years and has worked with attorneys for 20 of those, I can tell you the nuances of our business are lost on most people. Carefully crafted financial plans aside, you understand the cost of any mistake made when dealing with your client’s money can be detrimental to them, as well as you. I’ll never forget when I was asked to consult on a litigated case where the opposing counsel had compiled a Statement of Net Worth for the client valued at $168,000 and listed it under life insurance. Turns out, it was actually an annuity, in the husband’s IRA, with a living benefit. Imagine how wrong that could have gone if I hadn’t caught the error—proving how essential financial advisors are in this equation.

    No one knows your clients’ finances better than you. You’ve counseled them through every momentous stage of their lives, from buying their first home and saving for their kids’ college tuition to planting the seeds of what would grow into a healthy retirement fund. Unfortunately, not every story has a fairytale ending. When it comes time to dividing those assets, shouldn’t you—the advisor who understands every nuance of their net worth—help them make the best possible decisions? So, take a seat at the table … everyone will be glad you did.

    Sources:

    1. “What Types of Divorces Typically go to Trial?” Aaron Thomas, Attorney. March 31, 2016. https://www.lawyers.com/legal-info/familylaw/divorce/what-types-of-divorces-typically-go-to-trial.html
    2. Divorces by County of Decree and Duration of Marriage, New York State 2017: https://www.health.ny.gov/statistics/vital_statistics/2017/table51.htm

    Please reference disclosures: https://blog-dev.americanportfolios.com/disclosures/

    About The Author

     

    Financial Advisor 

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