People think that accounting is black and white, but between the black and white are many shades of gray. The gray area is where problem solving, creativity, and compromise live.
When people are going through a divorce, the uncertainty of their future causes tremendous anxiety. The financial balance that existed for the couple has to be divided and each party must achieve a new balance. Picture a marital jigsaw puzzle being taken apart and two single jigsaw puzzles replacing the first. Working with a professional Certified Divorce Financial Planner, as a couple or an in individual, to make a plan for the future can be an excellent experience.
Often one spouse has more knowledge about or control over the marital finances. Achieving a new balance and coming to a fair division of marital assets and debts will require both spouses to have a complete picture of their finances.
Important information to gather and understand includes:
- Income from wages, bonuses, stock options, etc.
- Non-wage income from things such as investments, pensions, social security, rental properties, etc.
- Expenses to include: home mortgage, rent, taxes, insurance, utilities, maintenance, repairs, auto expenses, insurance expenses, personal expenses, medical expenses, child expenses, etc.
- Assets such as: cash, homes, businesses, autos, boats, rental properties, personal property, pensions, investment accounts, etc.
- Liabilities to include: mortgages, student loans, credit card, car loans, 401K loans, lines of credit, home equity loans, etc.
Once your CDFA™ has all of the pieces that make up the marital puzzle, she will then analyze for completeness and accuracy. When the CDFA™ is confident that the puzzle is complete, she will then dive into the gray area to develop scenarios for the two separate puzzles and budgets for the future. These scenarios can include creative solutions to allow you to successfully move into your new lives. Perhaps you would qualify for an income-based repayment plan for a student loan. You may need to take a one-time non-penalized distribution from your spouse’s 401(k) plan when it is rolled over to help you start over. Maybe your spouse has a small business and cannot afford a lump sum payment to you for your interest, you could utilize a promissory note to ensure you receive payments over time. These are just a few examples of how a CDFA™ can help you creatively arrive at an equitable settlement and a plan for your future.