I find it fascinating how many professionals prefer to work in isolation when we all have much to learn from each other. In addition, we can better support our clients when we work together. In the divorce world, I’m sure that some of it stems from the more common approaches to divorce used historically. However, we’ve come a long way since then and with alternative dispute resolution gaining in popularity, there are more and more opportunities to collaborate. Before I get into why I love collaborating with other divorce professionals, let me share what inspired this post.
Before I get into that, let me clarify something. I know that typically when the words “divorce” and “collaboration” are used in the same sentence, people usually talk about the collaborative divorce process. To be clear, in this post, I’m not using the term “collaborate” to refer to the collaborative divorce process. However, if you want to learn more about that process, you can read about it here. It’s also worth noting that one of the great things about the collaborative process is that it provides a framework for collaboration. Still, there are many more opportunities to collaborate using other divorce processes.
Three Very Different Client Experiences
When we work with clients, sometimes they are represented by an attorney who welcomes the opportunity to collaborate on their case. Sometimes they are represented by an attorney who has no interest in collaborating. Sometimes, they still need to be represented (and we can help them find someone who we know will be a great collaborator). And sometimes, they’ve already terminated their relationship with their attorney and are looking for post-divorce support. However, we consistently find that it’s best for clients if we can collaborate with their attorneys in some way.
Scenario #1 – A client who contacted us post-divorce and didn’t receive financial guidance during the divorce process.
A few years ago, a client contacted me two years after her divorce was final. She reached out because she was interested in financial planning services. As we began the financial planning process, I quickly realized that all the assets had yet to be distributed per her Separation Agreement. When I dug in further, I learned that the language in the agreement meant that she had lost out on significant investment returns during that time, from when her divorce was finalized until the time we started working together. Not only that, but there were additional legal documents that needed to be filed in order to distribute assets to her. To make things even more challenging, she had already moved far away from where she got divorced and needed to reengage her former attorney to facilitate the legal documents.
If we could have supported the attorney during the divorce process, we would have worked together to ensure that the client’s assets were distributed in a more timely manner so that she got those investment returns. In addition, we could have provided some guidance around how the language in the agreement could have led to the negative financial impact that it had. While we were able to get all of the assets moved into the client’s name and complete her financial plan, it took about nine months longer than needed. It would’ve been a much more graceful process if we had been working with the attorney during the divorce.
Scenario #2 – A client was represented by an attorney who was not interested in collaborating.
Last year, I worked on a case where the attorney representing my client was not interested in our services. The client was very stressed about her financial situation and wanted to make sure that she would be able to afford her lifestyle post-divorce. When we requested documents from the client, she had to reach out to the attorney to get copies of things that she and her ex had already provided to him. The added communication with her attorney increased the legal fees. When reviewing the documents, we noticed missing information, which the client tried to ask her attorney about but never got much of a response.
After her case, as we were working through her post-divorce financial plan and helping her to transfer her assets in her name, we realized there were inconsistencies in her final agreement relative to the information we had previously received. Ultimately, based on the dates that ended up in the final agreement, our client received tens of thousands of dollars less cash than she would have otherwise been entitled to. This has put a tremendous financial strain on her over the last year that could’ve been avoided if the attorney had better understood the significance of the dates selected.
Scenario #3 – The attorney hired us directly to provide financial services on the case.
There are times when an attorney hires us directly, and we can assist from the beginning of the case. Starting at the beginning of a case allows us to ensure that financial documents are in order and that financial affidavits accurately reflect the current financial situation. In this specific case, we worked with the attorney to conduct a scenario analysis to illustrate why what the client thought he wanted was not in his best interest. We identified and documented a separate property claim that aided the attorney in protecting our client’s pre-marital property. We were able to strategize together and review proposals before they were sent to opposing counsel. In the end, the financial agreements were clearly and accurately documented in the final agreement allowing for a relatively easy post-divorce transition.
What Does It Mean to Collaborate With Divorce Attorneys?
Collaboration is about working together to support a client. Often, clients or their attorneys hire us to do a specific analysis to help their cases, and quite frankly, what is needed is a no-brainer. An example could be a passive growth analysis where the goal is to answer a specific question – how much is the pre-marital balance in a retirement account worth today? That’s not what I’m referring to.
An example of collaboration would be working through a scenario analysis together to know what is in a client’s best interest from a financial standpoint. Another example would be discussing what kind of analysis will best strengthen the attorney’s case or walking through the financial documentation together to discuss what’s missing and why it matters.
Below I share five reasons we love collaborating with divorce attorneys. However, it all comes down to being able to better support our clients and ease their financial transition.
Here are 5 reasons why we love collaborating with divorce attorneys:
We provide attorneys, and their clients, clarity regarding the pros and cons of financial options.
Depending on the nature of a client’s financial situation, the team can consider many scenarios. There can also be a lot of moving pieces – liquidity needs, tax implications, costs associated with assets, return on assets, interest rates on liabilities, and so much more. We consider all of this and do it with our client’s personal goals as our guiding star.
We can minimize client frustration around gathering and circulating financials.
When we collaborate with attorneys, it’s easy to share financial information, so the client isn’t trying to provide documentation to both of us. If clients need support completing financial affidavits, we can walk them through gathering the necessary information and preparing the forms.
We can help identify financial risks that may otherwise not be top of mind.
Often, clients reach out to us after the divorce is final to support them with ongoing financial planning and investment management. Unfortunately, we often identify risks that weren’t contemplated as part of the settlement as we’re working through the financial planning process. If CDFAs and attorneys worked together more frequently, we could better protect our clients.
We can assist with communication.
I’m sure you’re not surprised to know that our clients who are facing a divorce have legal questions, and while we can provide educational resources, we are not attorneys and don’t provide legal advice. With that said, I’ve noticed that sometimes when we discuss their questions and encourage them to address them with their attorney, sometimes they don’t ask, or sometimes it feels like a game of telephone where the question doesn’t really get communicated clearly. When we collaborate with an attorney, we can help our clients communicate their questions clearly and ask follow-up questions if additional information is needed.
In addition, clients are often emotionally overwhelmed as they move through the divorce process and commonly need to hear the same message repeated in order for it to sink in. Having the divorce team on the same page and communicating the same message can really help with this.
It allows for an easier post-divorce transition.
I mentioned the risks that we often identify after a divorce is already final. The other issue that consistently comes up is challenges related to dividing assets due to the language in the separation agreement. We can work together to ensure that the language included makes the transition of assets as easy as possible for the clients.
The one true reason why we love collaborating with divorce attorneys
Again, it all comes down to ensuring that the client is supported well. I believe that when professionals collaborate, they learn from each other and become better problem solvers. I also don’t think that any one professional can be an expert in everything. As financial professionals, we’re keeping up with the ever-changing tax laws, so the attorneys we work with don’t have to. Attorneys look at the case through a legal lens while we approach it through a financial one, which means more comprehensive support to the client overall.
Below is a list of some of the services we provide when working with attorneys:
- Gathering financial documents
- Reviewing financial documents to determine what’s missing
- Preparation of net worth statements
- Preparation of cash flow statements
- Income available for support calculations
- Marital standard of living and lifestyle analysis
- Calculation of income needed from support to maintain the marital standard of living
- Report preparation to illustrate possible scenarios for dividing assets and liabilities along with the associated consequences
- Review of proposals to identify financial risks
- Marital vs. separate property analysis
- Lump-sum spousal support buy-out analysis
- Timely presentations on changes to tax laws and how they can impact settlement agreements
If you are an attorney who shares our commitment to collaboration in order to better serve clients, I hope you’ll reach out. We look forward to working with you.