DIVORCE FINANCIAL PLANNING
People getting divorced generally do not want to destroy their lives. In fact, people who chose divorce often do so to improve the quality of their life, not extinguish any satisfaction and joy they may have. Of course, this is not always the case and even people who chose to end their marriages often have trepidation and anxiety about what that will mean for their future. Either way, one thing no one wants to do is to destroy their economic security.
Financial security often means financial planning and the plans most people make usually do not include divorce. One of the biggest fears people getting divorced have is that they will have no money. This is often true even for people of substantial means . . . the fear of not having money seems to go with the territory of divorce.
There is actually often good reason for this fear. A financial plan for one family structure may simply not work when that family restructures into two households–it may not work if the assets are simply chopped in half. A plan for a certain level of income to cover the expenses of a family that made a lot of sense before, may no longer work and this is true for college expenses and estate planning as well.
What can we do? The obvious thing to do is to make a new plan. Take a look at the available resources, the plan that is in place –even if it is ad hoc–and structure the settlement to take into account the preservation of wealth and the lifestyle needs of the family. What’s amazing is how infrequently this actually happens. When divorce is approached antagonistically, as it often is in the traditional adversarial process, everyone grabs as much of the pie as they can often leaving them with a handful of crumbs. That is not a plan!
Collaborative Practice and mediation both encourage parties together to make a new plan for financial separateness. Collaborative Practice utilizes the services of a financial specialist who can help the parties assemble the information they need to understand their situation and carefully consider the ramifications of each option as it is discussed and considered. If a family has been working with a wealth manager, estate planner, accountant or other financial professional, the Collaborative lawyers and other Collaborative professionals or mediator can work with those people to best understand the objectives and structure of the original financial plan and the best way to revise it for the new situation. Financial specialists can also be brought into a mediation to help the parties best understand their money and find the best way to manage it going forward.
I am often asked if people getting divorced can actually work together to figure out the best way to come apart. I answer if they want to and they get support, they usually can. Jon Kabat-Zinn explains in an interview how the mind is like the ocean, typically agitated by waves and activity on the surface, but calm and peaceful below the surface. If the calm below the surface can be reached, lawyers and other professionals can actually help more than they can by fanning the flames of fury.