6-28-18_Financial_750X250X70.jpg

You may have heard that collaborative divorce is a more cost-conscious alternative to traditional, litigated divorces. There’s no one-size-fits-all (or, really, one-cost-covers-all) divorce. Every situation is different, and yet, collaborative divorce can help control costs when finances come into play. The reason for that is simple: The financial neutral.

In many divorces, there are disputes about the actual value of an estate. If one or both parties in a divorce own a business, there will most certainly be questions about the value of the business. There can also be questions about whether certain assets are community property or separate property.

When a divorce is litigated, each side will argue about the value, and it’s a complicated estate, it’s likely that each side will employ a financial professional in an effort to sort that out. Since issues around money in divorce are particularly contentious, it can take a lot of time, energy, and legal fees to sort those out.

The Neutral Collaborative Divorce Professionals are typically CPAs, Certified Financial Planners and Certified Divorce Financial Advisors. They are specially trained in the Collaborative Divorce process. Without taking sides, they help the parties create and design options that enable the parties to reach individual as well as common goals. The financial neutral role in a divorce is meant to streamline the process of determining who should get what. Think of the financial neutral as a referee rather than a hired gun. Once both parties disclose assets and debts as completely and honestly as possible-which is vital to the collaborative process-the financial neutral goes about valuing the various assets and debts, and works with the couple and their lawyers to apportion the estate fairly.

Remember back to the last article and the analogy of the orange? It’s quite possible that an equal divide of the estate might not be the most fair and therefore best approach for the couple. If a divorce goes through court, a judge very well may see equal as fair, and order the sale or liquidation of assets that might be better left intact. The financial neutral can help propose creative solutions to asset allocation that would better satisfy both parties-perhaps one party gets to hold on to a liquid asset, and agrees to give a greater percentage of a liquid asset to the other party as compensation.

Not all collaborative divorces require financial neutrals, of course. If a marital estate is fairly uncomplicated, and the couple can determine a fair division on their own, then it’s not necessary to include a financial neutral in the process. But for larger or more complicated estates, the financial neutral can end up being one of the most vital members of the collaborative team.