What Kinds of Divorce Are There?
Link Posts: Approved Professional: Karen Koenig

What Kinds of Divorce Are There?

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.

  1. Impact to Income tax
    1. 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. 
  2. Missed assets.
    1. Missed opportunity to take a spouse’s pension.
    2. It can be used as a bargaining chip.
    3. Marital and separate property. What you had before you came into the property is yours. What was created while married is to be shared.
  3. Could work with a Certified Divorced Financial Analyst to help review the financial assets.

Mediation / Arbitration / Collaboration: 

  1. Medication is hiring a third party to mediate the divorce settlement.
    1. They don’t give advice. 
    2. They mediate as a neutral process.
    3. The mediator can be an attorney but not work as an attorney when acting as a mediator.
  2. Arbitration
    1. Two parties who are unable to move past a decision when mediating.
    2. The arbitrator assesses the situation and makes the final decision on behalf of the couple.
    3. The couple agrees to go with the decision of the arbitrator.
  3. Collaboration
    1. A group approach to divorce which includes an attorney, mediator, financial advisor, and/or CDFA, and mental health support.
    2. If children are involved, then experts in that area will be included, as well.
    3. 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.