Here are three typical ways couples can approach divorce. Here is a description of each with some considerations for each.
Litigation: When couples hire attorneys and go through the court system. Can be expensive and take a long time.
Pro se: When one party chooses not to hire an attorney. About 50% of people select to use Pro Se in divorce. Here are some considerations with this direction.
- Impact to Income tax
- There are tax consequences when transferring properties or stock between two parties. If these transactions are not handled properly, it could result in a big, unexpected tax bill.
- Missed assets.
- Missed opportunity to take a spouse’s pension.
- It can be used as a bargaining chip.
- Marital and separate property. What you had before you came into the property is yours. What was created while married is to be shared.
- Could work with a Certified Divorced Financial Analyst to help review the financial assets.
Mediation / Arbitration / Collaboration:
- Medication is hiring a third party to mediate the divorce settlement.
- They don’t give advice.
- They mediate as a neutral process.
- The mediator can be an attorney but not work as an attorney when acting as a mediator.
- Two parties who are unable to move past a decision when mediating.
- The arbitrator assesses the situation and makes the final decision on behalf of the couple.
- The couple agrees to go with the decision of the arbitrator.
- A group approach to divorce which includes an attorney, mediator, financial advisor, and/or CDFA, and mental health support.
- If children are involved, then experts in that area will be included, as well.
- This is a way to have experts at the table who manage each of the different areas impacted with divorce.
A Certified Divorce Financial Analyst (CDFA) helps couples and attorneys achieve equitable divorce settlements using knowledge of tax law, asset distribution, and short- and long-term financial planning.