One of the first things that a divorcing couple needs to do is gather your financial information. In the divorce process you will both need to have a complete picture of your financial situation before you can begin to work on a settlement agreement. In a Collaborative Divorce, this step is easier than in traditional litigation because you have the assistance of a neutral financial professional.
Your Collaborative Divorce Financial Specialist
There are important preliminary steps to take with the financial professional before settlement negotiations can be meaningful. The benefit of a Collaborative Divorce is that you work together with a neutral financial professional who helps to guide you through the important financial decisions.
- Determine the best format for sharing information. Younger generations are likely to access information from websites and download information that they securely upload it to the financial professional. Older generations are more comfortable with paper statements. They may be more comfortable printing out the information and providing the hard copies to the planner. It is important that the financial professional work with you to allow sharing of the financial documents in whatever way that helps the client feel comfortable and secure.
- Review the tax returns. The financial neutral may need to educate you about your finances. The first step is to go over the tax return and explain those figures to help understand your financial status. Typically, about 50 percent of the people we see are unaware of the information included in their tax returns. Financial professionals are often met with a response like, “I didn’t know we even had that account.”
- Review the bank statements. A lot of transactions go through the bank but do not show up on the tax return. For example, if the standard deductions are taken on the tax return, the amount of mortgage interest paid will show up in the bank statements but not on the tax return.
- Most importantly keep the lines of communication open. This way, questions that are left unasked can be answered. It gives you both a better understanding of the needs of each one of them and how to budget going forward.
When each spouse has full knowledge of the financial picture, you can work together to come to an amicable settlement. This is particularly important when there are minor children involved and you both want an agreement that will work in the best interest of your children.
This article was originally published on CollaborativeDivorceCalifornia.com
From the Blog
The Financial Games People Play In Divorce
Going through a divorce is a highly stressful life event. Unfortunately, some spouses play financial games with the intent of “winning” in the divorce as they are pitted against the other spouse in the traditional adversarial divorce process. Here are some of the most common games that people play: 1. Undervaluing the Business Often, in the year leading up to the divorce, the income … [Read More...]
Get in Touch
