Expert Assistance-When It Might Be Wise To Seek The Help of a CDFA or Other Financial Professional in Family Mediation.

You and your spouse have chosen to mediate your divorce because you wish to avoid the expense, acrimony, and publicity of litigation. You may hire an attorney-mediator who can assist your negotiation, educate you about the law, and draft your separation agreement in a streamlined process.  Or you might hire a mental health professional-mediator to focus on emotional issues and provide you with a memorandum of understanding from which an attorney will draft your agreement. Alternatively, you may have both an attorney and mental health professional co-mediate, to facilitate and provide legal information and emotional support in your divorce negotiation.  Aren’t you all set? Not necessarily.

What if one spouse is financially savvy and the other is not? Should you split all assets apples to apples and oranges to oranges or does it make more sense for each of you to take different assets? What if you decide not to sell the house immediately upon divorce?  Should you split the proceeds or give them to one spouse while the other takes a different portion of the marital estate? What are the tax consequences of cashing out different types of investments? Is there a reason why undifferentiated alimony might be more beneficial than child support? If so, how do you determine the “sweet spot” where the paying spouse reaps tax savings while the receiving spouse gets more support? What do you do with family trusts or medical savings accounts? Should you factor expectancies such as potential inheritances or pensions into determining asset division? Is business valuation a factor in your divorce?  Do you need a QDRO to divide a 401K or other retirement assets? What do you do with bonuses, commissions, or stock options? These are just some of the myriad questions that might arise as you plan your separation and divorce.

Your mediator should be able to give you basic information on many of these issues and often can assist you in working through various scenarios.  However, while your mediator likely understands some financial aspects of divorce, he or she may not be a financial specialist. In households with substantial assets or complicated finances, the expertise of a neutral, certified divorce financial analyst (“CDFA”) or other financial professional may be crucial to provide in-depth analysis of more complex asset division, support and budgeting issues.  A financial expert can give spouses a nuanced and long-term view of how family finances might look post-divorce and what the net-effect of different choices might be. These different choices can have significant impact on parties’ future finances, and should not be overlooked in the mediation process. It may be well-worth the investment for couples in mediation to enlist the help of a neutral expert to help plan the financial aspects of divorce.