Financial Issues Derive from Divorce Settlement Goals…
Every person pursuing a divorce should have clear divorce settlement goals. You likely have not experienced divorce before, and even if you have, your situation likely changed. Educating yourself could help to derive and attain more effective goals.
These goals should be shared and refined with both the attorney and the divorce financial analyst. Depending on your goals, you and your team will need to ask several questions to focus the settlement process on a number of issues. These issues may influence every aspect of your divorce from discovery to negotiations to settlement.
Top 10 Questions to Answer…
Each person considering or pursuing a divorce should identify what financial issues do or may affect them. We recommend collaborating with experts like Baron Analytics to determine relevance and strategic answers. The most common questions for concerning clients include:
- How could current and pending income, expenses, assets, debts, cash flow, and alimony form a favorable ‘equitable’ distribution?
- What about your situation could justify deviations to standard child support guidelines?
- How do you value and compare disparate assets?
- Recognizing that income influences every aspect of equitable distribution, what are the many different elements of income, and how can discovery data justifiable produce a comprehensive estimate for everyone?
- How can you represent your or critique your spouse’s income and expenses defensibly when finances remain comingled until after settlement?
- What tracing scheme best determines how much separate rights you have to each financial asset?
- How can you best determine and use factors like asset value, growth, liquidity, and risk to propose a settlement that your spouse will accept while best meeting your financial settlement goals?
- Can you afford and do you want the marital home?
- What are the settlement costs versus rewards tradeoffs for each point of contention?
- Is your spouse hiding assets or income?
Other Issues…
Every case is different. Not everyone will be impacted by the same mix of prominent issues. Similarly, some will have more concern with other issues. One of the biggest risks to a person facing divorce is ‘the unknown’. Too often, people look at their divorce in retrospect with regret that they did not understand nor prioritize issues that had tilted the settlement more towards their spouse. This is the proverbial ‘what you do not know that you do not know’.
This blog post intends to help a person identify many of these issues. However, many time issues cannot be identified or prioritized effectively without expert consultation. Examples of other issues include:
- How can inconsistent past income and expenses be represented defensibly as “monthly” values?
- Does your spouse’s spending behavior indicate a likelihood for adultery?
- How would the proposed settlement change your cash flow and various household expenses?
- What are the tax consequences of a proposed settlement or change in marital status?
- How should a family business’ financial disposition equate to its asset value versus the owner(s) income will it produce? What are these values?
Next Steps…
After questions have been considered and initial answers collaborated, you should understand the likely consequence to you for each of these issues. An expert should be able to estimate the level of effort to provide analysis for each issue and estimate the how much each issue could swing a settlement outcome. Likewise, an attorney can estimate their costs and the likelihood that the evidence could produce a desired result. This helps to iteratively prioritize.
With initial issues defined and prioritized, your team can execute and probe deeper to your benefit. This process is dynamic. Over the course of reviewing data, conducting research, and performing analysis, your team will discover new insights and perspectives. As more is known, priorities may change. That is normal and should be expected and embraced with standard scrutiny. The key is for communications to remain open and frequent across the team.
This is your divorce, and you will experience the consequences, for better or worse. Remain informed, remain in control, and remain flexible.
For Further Consideration…
Divorce and Money: The Most Common Financial Issues of Divorce in the US (thebalancemoney.com)
The Ultimate Divorce Checklist for 2023 (How to Prepare) (survivedivorce.com)