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A Gentler Way to Split the Sheets

by | Cash Flow, Weekly Column


splitrings.jpgMaking a marriage work is a 50/50 proposition, with each spouse being 100 percent responsible for his or her 50 percent. That said, there is also a 50 percent probability that the marriage will not work.

What happens to the 50 percent of people who face divorce? Most couples find two attorneys and spend months in an embittered battle over property, possessions, and custody. When the smoke clears, few spouses or children emerge emotionally or financially intact.

It doesn’t have to be this way. A process called collaborative divorce is another option. With this approach, the goal is for all parties—spouses and children—to have their highest priorities addressed. Every aspect of the divorce is negotiated, rather than leaving the decisions up to a trial judge.

The couple employs a divorce collaboration team, consisting of two attorneys, two divorce counselors, a child advocate, a financial expert, and, if there is a lot of real estate or a business, an appraiser. The team works in a collaborative fashion to resolve the financial, property, and custody issues inherent in most divorces. Collaboration means there are no secrets. The attorneys share information with each other and with the financial professionals. Hiding assets is not permitted. Nor is covering up the reason for the divorce.

The idea of creating such an environment is almost laughable when you consider that the couple probably stopped speaking to one another—or at least being civil—months ago. That is where the collaboration team comes in. The two divorce coaches support the spouses and help facilitate discussions between them. The coaches can help them separate their feelings of hurt, betrayal, sadness, and anger from the objectivity needed to make crucial financial or custody decisions they face. Making such decisions rationally is of extreme importance so that in the future they don’t regret a poor decision that was prompted by a difficult emotion.

A child advocate, typically a therapist, will work with the children, both to help them divorcekids.jpgprocess the separation of their parents and to advocate for their best interests. A number of studies indicate that children of divorced parents who left on amiable terms are far less likely to abuse alcohol, drugs, or sex than the kids whose parents left embittered.

The financial expert can be a CFP®, CPA, or other qualified financial professional. This advisor’s job is to provide unbiased advice on how to fairly structure the division of assets and balance cash flows. This will include looking at the “big picture” and how a strategic split of the assets can best serve each spouse and the children. The financial expert (along with an appraiser if necessary) will facilitate the valuation of assets such as real estate, business interests, personal property, retirement plans, stock options, and other financial assets. He or she will also take into consideration each spouse’s earning capacity and cash flow needs.

In most cases, the process works. If however, the spouses can’t agree and decide to go to court, they cannot employ any of the professionals on the collaborative team during or after the divorce is completed. This means they must start over, from square one. This provision is necessary to ensure that every professional on the collaboration team is neutral and negotiating without bias.

You might think employing a team of professionals must cost much more than a normal divorce. According to what I’ve read, it actually costs about one-third as much as a contested divorce done in an adversarial way.

While no one wants to think about a divorce, if you do find yourself splitting the sheets someday, a collaborative divorce may be a better way.

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