Collaborative Divorce: The Benefits of using a Financial Neutral
Divorces have a reputation for being messy and pitting couples at each other’s throats. Much of the controversy surrounding divorces stem from the allocation of assets and other financial concerns. You can reduce the associated stress when you use a Financial Neutral in collaborative divorce cases.
What is a Collaborative Divorce?
A collaborative divorce is a divorce process where each party is represented by an attorney who has been trained in the collaborative process, but rather than taking a specific position, the parties and their attorneys work together to come up with solutions that are in everyone’s best interests. If the parties choose the collaborative process, they are required to sign an agreement not to go into litigation. If the collaborative divorce process doesn’t work out, then the parties can choose to go for litigation but are required to hire new attorneys who were not involved in the initial collaborative agreement. That’s a big incentive for everyone to keep moving forward toward an agreement.
As part of the collaborative divorce process, neutral specialists are frequently consulted to provide relevant information, so the parties can make informed decisions. For example, a mental health professional could be consulted to give advice relating to the welfare of the children. There could also be a Financial Neutral who provides financial education and analysis around key financial issues.
Who is a Financial Neutral in a Collaborative Divorce?
A Financial Neutral is a financial expert, who is usually a Certified Divorce Financial Analyst (CDFA), meaning the individual has extensive education in the financial and tax implications of financial decisions made during a divorce. The Financial Neutral provides educational and informational advice that will enable the parties to make wise decisions about their assets and their cash flow.
Clients may begin the collaborative process by first engaging the collaboratively trained neutral professional or by first retaining collaboratively trained attorneys. If the Neutral is hired first, both parties must agree to the same professional as the Neutral is hired jointly. To prevent any issues of bias, the Financial Neutral cannot have worked for any of the parties in the past. For example, the parties should not hire their financial advisor or tax accountant. The Financial Neutral also agrees not to work for either of the parties in the future.
It is worth noting that the Financial Neutral does not have to be someone local. Many, including Intentional Divorce Solutions, are offering their services virtually. Meeting with your Financial Neutral virtually can be a convenient and cost-effective solution.
The Benefits of a Financial Neutral
The following are some of the reasons why you should hire a Financial Neutral for your collaborative divorce case.
In traditional divorce cases, the couples each hire a separate financial expert to give them advice on financial matters such as business valuations, separate property tracing, dividing assets, etc. With a Financial Neutral, the couple jointly hires their financial professional, reducing the costs that they would otherwise incur if they hired separate professionals.
Assists in Parties Achieving a Mutual Financial Settlement
With a Financial Neutral, the parties work together to come to an agreement regarding their financial assets. Since the Financial Neutral is working for both parties, the focus is identifying a balanced financial settlement that is mutually beneficial to the parties.
A lot of people depend on their attorneys to advise them on financial issues like taxes, and the IRS. Attorneys might have gotten experience on these issues over the course of their practice. However, this isn’t their expertise and as such, they might not be as knowledgeable as you might want.
A Certified Divorce Financial Analyst (CDFA) on the other hand, is specifically trained on divorce-related financial issues such as separate property tracing. All the Financial Neutral’s billable hours are devoted to offering financial expertise. So, make sure you utilize the expertise to the fullest.
Organization of Financial Data
The Financial Neutral helps the parties collect financial data that would be relevant to the eventual settlement. This would involve things like preparing a report on the assets, income, and debt of the parties. The report is usually supported by backup documentation the spouses provide. The Financial Neutral also helps couples come up with current and projected budgets that can help guide further discussions about support.
Analyze Future Child Expenses
In a divorce where there are children involved, the Financial Neutral can help the couples identify future expenses related to childcare. For a lot of couples, funding the child’s post-secondary education is usually a major issue. The Financial Neutral can advise the couple on their options for financing their child’s post-secondary education.
Financial Modeling and Projections
The Financial Neutral considers not only the short-term implications but also the long-term implications of financial decisions and creates various models for property division, maintenance, and child support. The parties are then at liberty to choose which of these models suit their own unique needs.
Individuals are often concerned about how the divorce affects their retirement and future financial situation. To remedy this, the Financial Neutral can prepare long-term financial projections for the parties. This way, they would be able to see how the divorce affects their finances both in the short term and the long term.
Financial Input in Settlement Deliberations
During the team deliberation, the Financial Neutral in collaborative divorce cases will chime in with the relevant financial information. S/he can inform the deliberators of how certain assets appreciate or depreciate over time as well as how taxes affect the decisions the parties want to adopt.
There is also less financial conflict at this stage since the Financial Neutral works for both parties. This is compared to a situation where there are two diametrically opposed financial experts trying to fend for their individual client. In the end, the parties merge the Financial Neutral’s advice with the legal advice of their attorneys, leading to a more sophisticated and nuanced divorce settlement.
This is the beauty of collaborative divorce, where all parties work together towards a mutually beneficial outcome.
We know that every divorce is unique, which is why we emphasize the importance of having a Financial Neutral involved in the decision-making process. Their expertise in financial matters can help both parties make informed decisions and avoid potential conflicts.
FAQs About Collaborative Divorce
Q: What is a collaborative divorce?
A: Collaborative divorce is a legal process where both parties work together with their attorneys to reach a settlement agreement without going to court. It focuses on finding mutually beneficial solutions and promotes open communication and transparency. It often involves other collaborative professionals such as a Financial Neutral, Parenting Expert or Communications Coach.
Q: How is collaborative divorce different from traditional divorce?
A: Unlike traditional divorce, collaborative divorce eliminates the need for court intervention and puts the decision-making power in the hands of both parties. This allows for a more amicable and efficient resolution of issues.
Q: Do I still need an attorney if I choose collaborative divorce?
A: Yes, it is recommended that each party has their own collaboratively trained attorney throughout the collaborative divorce process. The attorneys act as advocates for their clients while also promoting cooperation and compromise.
Q: What is a collaborative divorce team?
A: A collaborative divorce team is a group of professionals who work together to help couples navigate the collaborative divorce process. This typically includes both parties' attorneys, financial neutrals, and potentially mental health professionals such as parenting experts or communications coaches.
Q: What is a Financial Neutral?
A: Financial Neutral is a financial expert who works with both parties in a divorce to help them reach a fair and equitable agreement. They are not aligned with either party, which allows them to provide unbiased advice on financial matters.
Q: How can a Financial Neutral benefit me in my divorce?
A: Having a Financial Neutral involved in your collaborative divorce can bring numerous benefits. They can assist with valuing assets, analyzing tax implications, and creating realistic budgets for post-divorce life. This can lead to more informed decisions and avoid costly mistakes.
Q: How do we find collaborative divorce attorneys?
A: One way to find collaborative divorce attorneys is through referrals from trusted sources, such as your CDFA or friends or family members who have gone through a similar process. You can also search for qualified professionals on the website of the International Academy of Collaborative Professionals (IACP). Additionally, your local bar association may have a list of trained and experienced collaborative divorce attorneys in your area.
How Intentional Divorce Solutions Supports Clients Utilizing the Collaborative Divorce Process
Leah Hadley and Liesel Darby are both highly skilled and collaboratively trained professionals. Leah specializes in providing expert guidance and support to families navigating the intricate financial aspects of divorce. On the other hand, Liesel serves as a valuable member of a collaborative divorce team, leveraging her expertise as a Communications Coach to facilitate effective and open communication between all parties involved. Together, they bring a wealth of knowledge and experience to help individuals and families navigate the complexities of divorce with confidence and clarity.
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