It is universally understood that the divorce process is extremely complex, which really shows when you are trying to resolve intricate financial issues between parties who have totally different ideas on what is a fair way to separate their assets.
From helping to determine the value of a business to forecasting future income potential, financial experts are a crucial professional to include on your divorce team.
While it is easy to explain over and over the reasons a financial advisor is invaluable during this process, it may be more constructive to show examples of how advisors affect divorce proceedings on a day-to-day basis.
Giving An Edge In Negotiations
Henry and Mary have been married for eight years, and due to irreconcilable differences, have decided it is time to go their separate ways. Henry owns a business, which he started prior to the marriage, so a determination will eventually need to be made on what portion of the business his wife is entitled to in the property settlement.
As they prepare for their first mediation session, Henry’s attorney suggests that he speak with his CPA to get an idea of the value for the marital portion of the business even though they only planned to go over some minor issues during this round of mediation.
As it turns out, Henry and his attorney found an opportunity to toss out some numbers for what they determined as Mary’s share in the business, and she and her attorney accepted the figure. This helped to avoid the need for additional fees in hiring an outside evaluator or excessive litigation.
The figure agreed upon was advantageous to John for several reasons: By preparing ahead of time with his CPA, he was able to move past a potentially complex and expensive issue while also receiving a beneficial settlement agreement at the same time.
Had his wife hired her own evaluator, a different figure may have been reached, which could have led to a higher marital portion of the business’s value being awarded to Mary by the judge if it went to trial.