ANI MASON IS THE CREATOR OF THE DIVORCE FIELD GUIDE. YOU CAN LEARN MORE ABOUT HER HERE AND HERE.

Episode 79 Transcript: Getting Outside Help Organizing Your Finances

In this episode, I want to talk to you about some of the options that are available to you if you feel not equipped or not well-equipped to handle putting together your financial information on your own. The first thing I want to say about that is that it’s totally common. Even if you listened to the last four episodes about understanding and assembling your financial information in our four key categories of income, expenses, assets, and debts, you may well not feel that you’re able to take that on completely independently in your divorce process because it’s too complicated or foreign to you, because the stakes are too high, or for any series of reasons. That’s fine. There’s a very wide range of how different people approach handling financial information in their divorce, all the way from a complete DIY approach where the individual puts together all their financial information completely independently, they don’t need any assistance in understanding it, they make proposals based on it completely independently, and they feel equipped to make decisions about the ultimate resolution of their case completely independently. That’s one end of the spectrum. At the other end of the spectrum would be somebody who has almost no involvement in any of the financial preparation work or decision making in their own case.

Obviously, each individual has to ultimately say yes or no to the financial settlement proposals in their case, but there are many people who are not at all involved in putting together their financial disclosure information, understanding the underlying data that makes up their information around income or expenses or assets or debts, coming up with what to propose for a settlement. They may not even ultimately feel equipped to make the final decision on what they are willing to accept as a financial settlement. They may be looking for outside assistance with that as well. Between those two endpoints in the spectrum is really where the vast majority of people fall. They’re not doing everything entirely on their own, but they’re also involved in it to the degree that they’re comfortable and then they’re getting outside assistance with the things they don’t feel equipped to handle.

That’s what I want to talk about in this episode is to the extent you do not feel 100% confident handling every financial aspect of your divorce negotiation and settlement on your own, including the initial information gathering phase, what are your options for getting outside assistance? My first word of advice to you is to try to pinpoint the financial areas that you need help with. First, we have the four key financial categories of information: income, expenses, assets, and debts. You want to try to pinpoint if it’s one, two, three, or all four of those categories that are confusing to you or that you need help with. For instance, if you are a W-2 employee and you have no other sources of income whatsoever but your compensation from your work, clarifying what your income is may feel very manageable to you, whereas putting together a list or a spreadsheet of your assets and your debts may feel more challenging, or vice-versa.

You may have very simple and straightforward types of assets and debts, but for instance, you run your own business, and you find it quite challenging to know, what is your true amount of income? What’s an accurate reporting of your income for the purposes of your divorce negotiation? Or income and asset and debt, identification may feel very manageable to you, but putting together an accurate budget, in particular, if your living situation is changing, and knowing what categories of kid-related expenses to break out, that may feel very challenging to you. What I want to emphasize is that there are different areas of financial understanding in this process and you want to try at the outset to clarify for yourself and also for any outside expert who is going to be helping you. Where do you need help? Is it understanding income? Is it clarifying what your expenses are? Is it understanding what your assets and debts are?

Secondarily, we just talked in the previous four episodes about what information is helpful and critical to identify at the outset of your divorce process. That’s one of our first financial steps is just identifying key financial information, but that’s not where we stop in a divorce negotiation. You go from identifying key financial information to thinking about proposing ways that you might like to arrange your finances going forward around child support and spousal maintenance and around asset and debt division. That’s essentially making proposals or generating options for ways to resolve the financial matters in your divorce.

Then finally, you have the phase of assessing and considering and ultimately accepting one of the options or proposals that you’ve generated. So there’s putting together financial information and then thinking about how to generate different options or proposals for settlement based on that financial information, and then ultimately assessing your different options for settlement and coming to one that you accept. Those are the different phases of how you will be utilizing and engaging with financial information in this process. You may only need help with the first phase of that, getting a handle on what your financial status quo is on what your expenses are and what your assets are. Once you have that, you may feel confident in knowing what you’d like to propose or what options you’d like to suggest are generated around support or around asset division. You may also feel confident that once you and your spouse have generated those options or proposals, you will know what you feel good about accepting or not accepting in terms of settlement offer, or vice-versa.

You may feel confident putting together a snapshot of your status quo in terms of what your income is, what your expenses are, what your assets and debts are, but you’re not really sure where to go from there or how to generate a thoughtful proposal for how to settle your case or how to know what proposal is okay to accept for the resolution of your particular case. There are different professionals who can help you with those different phases of the process. At the outset, if you just know that you don’t feel confident handling 100% of all financial matters in your divorce negotiation on your own, try to identify where you need help. Don’t worry if you’re not exactly sure on specifically where you need help because that’s also the job of the professionals who are working with you. Bring as much information to the table about where you need help and let them help you fill in the rest.

Now let’s talk about who are the professionals who can assist you financially. First of all, you have in your divorce negotiation, you would be working with either a lawyer and/or a mediator, and oftentimes both. Absolutely, those professionals are well-equipped to and experienced with helping clients in (a) putting together their financial information; (b) generating different options for settlement or different settlement proposals; and then (c) thinking through what settlement proposal or what different options are going to ultimately work for them as a final resolution of their matter. You can expect to lean on your lawyer and/or your mediator for many of those tasks. Certain of them will lend themselves more to assistance from an individual lawyer than to assistance from a neutral mediator.

For instance, giving you advice as to what ultimate settlement offer you should accept or is good enough for you to accept is really not the role of a neutral mediator. That’s more the role of an individual advisor. Generating settlement options can be the role of a mediator if you’re comfortable doing that together with your spouse. It is also often the role of an individual advisor. If figuring out different options for settlement is something that you would like some professional guidance on but individually, you would want to look to either your individual attorney or, what we’ll talk about in a second, would be an individual financial advisor.

Similarly, with gathering financial information, it may or may not be a good use of your time in mediation, if that’s the process you’re in, to have your mediator, say, help build out your budget. That might be something that’s more appropriate to use an individual advisor for. At the same time, many couples will use a mediation session or sessions to clarify and share with each other all the information that they have about their spending, about their budget, so that they can each independently develop accurate budgets for themselves. Or when people have independently developed budgets, they will often use a mediation session to come together, compare their budgets, and pull out any duplicate items, which often happens when you, for instance, have kids in common and you may both include kid-related expenses that are the same, that are duplicative in your respective budgets. So you want to give some thought to and consult with your mediator and with your independent attorney on this as to who of the legal professionals is best suited to assist you with the particular financial topic or financial homework item or challenge.

There are a couple of different types of financial professionals or advisors that you could work with throughout your divorce process. The first type would be somebody whom you have a preexisting relationship with. This person has been your wealth manager, your financial planner long predating your divorce. You have a preexisting relationship, and they may be very well-suited to help you (a) understand your family’s income, your income and your spouse’s income over time; (b) understand what your spending looks like and help you break it down into appropriate subcategories and help you project what it will be if and when your living situations change. They’re also often very well-suited, and they already have done the work to identify, “These are what your assets are. These are what your debts are.” If you are able to work with a financial professional whom you have a preexisting relationship with, that’s really terrific.

The one piece of advice I want to give you is to always take the information that you create with them about your income, your expenses, your assets, and your debts, and make sure to run it by your lawyer and/or your mediator, because there are ways in which the legal world of divorce thinks about income, expenses, assets, and debts that can be slightly different from how a standard money manager would think about those items. So, you want to make sure that the way you’re conveying your expenses or your assets or your debts or whatever financial data point is consistent with the way the matrimonial law in your particular area understands that item. That just takes minimal consultation with your lawyer or with your mediator.

However, what can be challenging, if you’ve been working with a financial professional for some period of time predating your divorce, is that they may have been working with you and with your spouse in a neutral capacity, and they may or may not feel comfortable doing more than just helping you identify a snapshot of your assets and your debts, maybe helping you put together a family budget and/or clarify sources of income for both of you over time. It may feel like a conflict to them to assist one or both of you in coming up with what you should propose as a potential settlement of your finances and certainly advising you as to what to accept in the ultimate settlement of your finances.

Now, if the financial professional you’ve been working with for a long time has always been your financial advisor, they’ve always worked with you independently, that won’t be an issue for you. If they have been neutral, they may not be able to assist you with the secondary and the final phases of the divorce negotiation process around finances, which are option generation, settlement proposals, and then finally assessing proposals and accepting settlement proposals for final resolution of your case. In which case, you can also work with a financial professional, in a short-term relationship, whose practice is focused on and targeted toward individuals and couples who are going through the divorce process. Those individuals are very familiar with helping you figure out exactly how to generate a budget and a forward-looking budget that incorporates changes, for instance, in your housing situation. They’re very well-versed in making sure to break out kids’ expenses separately in a budget to not duplicate them or to help you think about how to look at past income and generate reasonable expectations about future income in the divorce, certainly how to understand how to identify your assets and debts and understand the different tax consequences that may relate to those that you should take into consideration in your negotiation process.

The downside of starting a relationship with a new financial professional is that they don’t know you and you’ll have to bring them up to speed and share your different documents with them, which in a preexisting relationship you’ve already done. The upside is that, number one, they don’t have an expectation of a future relationship, so their engagement is very clean in that sense. Number two, they’re not biased, in favor of one spouse or the other. If you wanted to work with them in a neutral capacity, assisting both you and your spouse, they can absolutely do that.

Again, someone who is working as a neutral is going to be less able to help you individually in thinking about how to generate settlement proposal options, but they will absolutely be able, from a neutral perspective, to help you clarify what your income and expenses are, and what your assets and debts are. If you anticipate using, for instance, your attorney to help you generate different options for settlement, different settlement proposals, and help you analyze what options or proposals to accept for the final resolution of your case, you may not need the financial professional to help you beyond the task of clarifying what exists today. What is your income today? What are your expenses today? What are your assets today? What are your debts today?

Finally, there are financial professionals who work long term with people as wealth managers, financial planners, but they have not had a preexisting relationship with you. Through the course of your divorce, they may be willing to offer assistance to you and guidance to you, not in exchange for, but with the expectation that when you receive whatever assets you receive or retain whatever assets you retain from the divorce, they would ultimately be investing some or all of those assets for you. That may be something you’re interested in or not, but it’s an expectation that’s important to be aware of if you engage the services of somebody like that.

As I was talking about before, a financial expert who has a short-term focus on assisting you in the divorce process only is going to charge you a fee. It may be a flat fee. It may be an hourly fee. They’re going to bill you for your work, whereas somebody who has the expectation that you’ll be investing with them long term or they’ll be investing your money long term, because that will ultimately compensate them, they may not charge you, certainly charge you their full rate. They charge you a limited flat fee, or they may not charge you at all to assist you to a certain degree with financial matters in the divorce process. That could be, as we’ve talked about, getting your financial information together. It could be generating proposals for settlement. It could be assessing what’s a good proposal or option for you to accept as a final resolution. You want to be clear about whether or not you are looking for long term financial help when you engage the services of someone like that.

I do want to throw in there that outside of the professional realm, certainly there are the more informal and cost-effective options of getting assistance from family or friends. I definitely want to warn you there that unless your family member or your good friend is a divorce attorney and/or a financial planner or wealth manager who is very familiar with the divorce process, whatever they assist you with, you do want to be double checking with your mediator or your attorney to make sure that it’s really in sync with the way divorce law looks at these different financial topics, which, as I said, is slightly different in certain areas than the way a typical wealth manager might look at how to categorize your assets and debts or what they might consider income to you and divorce law would not, or vice-versa. Just bear that in mind.

Also, there are tools online, different websites and different apps that can assist you, I would say, most of all in the process of budgeting and generating an organized summary of and an understanding of your expenses. Some common ones right now would be Nerd Wallet. That’s a website. It has a lot of resources online. Mint.com, which is a website and an app, has a lot of resources for tracking your spending and helping you assemble a budget. I would actually say that if you’re not already set up with a website like Mint, at the very outset of your process, it could actually be quite helpful to you to set up a service like Mint where it’s pulling transactions from your credit cards, from your banking accounts, so that you can start to be recording that data digitally and building the foundation on which you will create your understanding of what your spending habits are, what your needs are, and what you can anticipate to be spending going forward.

The final thing I want to say that I observe with many clients going through the divorce process, whether they are in mediation with me or an individual client, is that I think it can feel not appealing to go to another professional or another resource other than your own attorney or your own mediator to get assistance with financial matters. I think adding another professional can feel like just adding to the cost of your divorce. Then there’s the energy that’s required in establishing yet another relationship, again, if this is not a preexisting relationship that you have with a particular wealth manager who has been working with your family for some time. What I observe is that when you can delegate some of the specific financial tasks to a financial professional, they are often able to complete those tasks more thoroughly and more efficiently than your lawyer or mediator who is not a financial professional could. Ultimately, that saves you money, not to mention it can create a more thorough work product for you.

I want to encourage you to not be deterred by the understandable wish to receive all the services that you need from one person as a one-stop shop. Certainly, that is absolutely possible, but you want to at least explore the possibility of whether or not it could work better for you to get some of the assistance you need around finances, in particular, putting together your financial information, if you’re working only with a mediator, then potentially also assistance with making settlement proposals and assessing settlement proposals from an outside financial professional. If you don’t know where to turn for that, your mediator or your attorney will have names of people they have worked with over time across many cases whom they can recommend to you with confidence. So you know that at a minimum if you’re going to get the energy together to go meet with a new person and share information with a new person, you’ll at least be talking with someone who is quite competent and would do a good job for you if you chose to work with them.

That was our episode on getting outside help with your finances if you’re not comfortable handling your entire financial negotiation on your own, which most people aren’t. I hope it was helpful for you.

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