By Dan Reiter, CFP®, CPA, CDFA
How to Prepare for a Divorce: Hiring the Right Team
When high-net-worth couples decide to divorce, the first thing they think is, “I need a good attorney.” In working with divorcing women, we have found that many people don’t realize that other key advisors are essential in making sure their divorce protects what’s most important to them.
Your hand-picked divorce team can make the process easier and less stressful at a time when you need it most. Here is a summary of the key roles and the value each advisor can bring to the table.
Divorce Financial Planner
A divorce financial planner can help you assess your financial situation and develop a plan for your future. They can:
Help Organize Your Finances: They will help you gather all necessary information for your divorce, including your expected future income and expenses, as well as organize details for all your assets and debts.
Understand Financial Implications of Settlement Outcomes: They can help you understand the implications of various settlement options and how those impact your future financial security.
Tax Planning: They can advise you on tax implications of your divorce, both today and years into the future.
Investment Planning: They can help you create an investment strategy to help you both protect and grow your retirement assets.
Retirement and College Planning. They can help you plan for your future post-divorce to include how to best achieve your retirement or education planning goals.
It is important to find a divorce financial planner that is well versed in the divorce process and has the necessary experience and education to help you navigate it. Hiring a Certified Divorce Financial Analyst professional ensures you hire a financial professional that is skilled in analyzing and providing expertise related to the financial issues of divorce.
According to the Institute for Divorce Financial Analysts:
“A CDFA is someone who comes from a financial planning, accounting or legal background and goes through an intensive training program to become skilled in analyzing and providing expertise related to the financial issues of divorce. The CDFA:
Becomes part of the divorce team, providing litigation support for the lawyer and client, or becomes a member of a Collaborative Law team. In either event, the CDFA® will be responsible for:
Identifying the short-term and long-term effects of dividing property.
Integrating tax issues.
Analyzing pension and retirement plan issues.
Determining if the client can afford the matrimonial home – and if not, what might be an affordable alternative.
Evaluating the client’s insurance needs.
Establishing assumptions for projecting inflation and rates of return.
Bringing an innovative and creative approach to settling cases.”
Divorce and Family Law Attorney
A family law attorney is your primary legal advocate. They will guide you through the legal aspects of your divorce, including:
Understanding Your Rights: They will explain your rights and obligations under family law in your state.
Negotiation and Mediation: They can negotiate with your spouse's attorney or mediate to reach a mutually agreeable settlement.
Litigation: If necessary, they can represent you in court.
Child Custody and Support: They can help you determine child custody arrangements and child support payments.
Property Division: They will assist in dividing your marital assets and debts fairly.
Spousal Support: They can help you understand and negotiate spousal support.
For how to find a divorce attorney, consider starting with recommendations from family or friends. You may also search online for divorce lawyers in your area or search local bar associations for attorneys that specialize in family law. One example would be the Kansas City Metropolitan Bar Association’s KC Lawyer Finder.
When selecting the right attorney, you should consider factors such as experience in divorce, reputation, reviews, fees, and how comfortable you feel about their ability to understand your situation and unique values.
Tax Professional
A tax professional, such as a Certified Public Accountant (CPA) or Enrolled Agent (EA) can help you with:
Property Division: They can advise you on the tax consequences of dividing property.
Child Support and Alimony: They can help you understand how these payments affect your taxes.
Deductions and Credits: They can identify tax deductions and credits you may be eligible for.
Filing Your Taxes. They can help ensure you are compliant with all tax laws and regulations, and ensure you file all necessary tax returns to remain compliant.
What is the difference between a tax professional and divorce financial planner? Accountants and tax professionals often focus more heavily on the tax implications of today, whereas a divorce financial planner will often take a more long-term view of taxes in the future.
The steps to find a good tax professional are like that of a good attorney. Start with recommendations from family or friends, or with an online search for CPAs or EAs in your area. You may also use a specific online search tool such as the IRS Directory of Federal Tax Return Preparers, which allows you to sort by credentials and proximity to you.
Divorce Mortgage Professional
A mortgage professional can help you refinance your home or obtain a new mortgage if necessary. They can:
Assess Your Financial Situation: They will evaluate your income and credit score.
Help You Choose the Right Mortgage: They can help you select a mortgage that meets your needs and budget.
Guide You Through the Process: They will assist you with the paperwork and closing process.
For many individuals facing divorce, it is common to face significant changes in income and assets. As such, handling loans can be a little trickier. It often pays to work with a mortgage professional that has specific knowledge and experience in working divorce cases. Lending professionals that have the Certified Divorce Lending Professional (CDLP®) certification have specialized training in divorce situations. To find a CDLP® in your area, you can use their online search tool.
Mental Health Professional
A mental health professional can provide emotional support and coping strategies during your divorce. They can:
Help You Cope with Stress and Anxiety: They can teach you relaxation techniques and other coping mechanisms.
Address Grief and Loss: They can help you process your emotions and move forward.
Improve Communication Skills: They can teach you effective communication strategies to navigate difficult conversations.
According to the American Psychological Association, some of the more important issues to consider when selecting a good professional are as follows:
· Are they licensed?
· Will your health insurance cover the therapy from this provider?
· Are there limits to the number of sessions covered under your insurance?
Selecting the right mental health professional is a very personal process. As such, referrals are often the preferred method of finding one. If you do not have any referrals available, however, you might use resources such as the National Register of Health Service Psychologist’s find a psychologist or the Find A Therapist online search tool.
Specialty Appraisers
If you have valuable assets that are hard to value, such as art, antiques, collectibles, closely held business, or private investments you may need to hire a specialty appraiser to determine their fair market value. An appraiser can:
Assess the Value of Your Assets: They will provide an accurate valuation of your assets.
Prepare Documentation: They can provide documentation to support the valuation.
Finding the right professional depends highly on the asset being valued.
For artwork, consider contacting your local art museum for referrals to professionals they have worked with. For example, the Nelson-Atkins Art Museum in Kansas City has a list of appraisal referrals on their website.
For small businesses or private investments, you will want to find a certified valuation professional with specific divorce experience in your state. One online directory is the National Association of Certified Valuators and Analysts®.
Where Do You Start?
Given the complex landscape of divorce, it can be overwhelming to consider where to begin. You should start with a good divorce attorney or divorce financial planning professional. Often, these are the professionals that serve as the “hub” of your team and can also provide valuable insight into finding the right professionals in other professional areas.
By assembling a skilled team of professionals, you can increase your chances of a successful and less stressful divorce. Remember to choose professionals who are experienced, knowledgeable, and compassionate.
Investment advice, financial planning, and retirement plan services are provided by Prosperity Planning, Inc., an SEC registered investment advisor. The information contained herein, including but not limited to research, market valuations, calculations, estimates and other material obtained from these sources are believed to be reliable. However, Prosperity Planning, Inc. does not warrant its accuracy or completeness. The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or to participate in any trading strategy. If an offer of securities is made, it will be under a definitive investment management agreement prepared on behalf of Prosperity which contains material information not contained herein and which supersedes this information in its entirety. Any investment involves significant risk, including a complete loss of capital and conflicts of interest. The applicable definitive investment management agreement and Form ADV Part 2A will contain a more thorough discussion of risk and conflict, which should be carefully reviewed before making any investment decision.
