Collaborative Divorce: 3 Reasons to have a Neutral Financial Professional
In a divorce it is often assumed that assets will be divided 50/50. The reality is far more intricate than splitting everything down the middle. One of the advantages to a Collaborative Divorce is that you have a financial professional to make the journey smoother, more transparent, and financially sound for both you and your spouse. Here are three of the advantages of having financial expert in your Collaborative Divorce case:
1) Expertise Beyond the Basics
While attorneys have a broad understanding of divorce finances, a financial professional will dive deeper into the specifics. Many people don’t fully understand what they have. For example, the difference between a 401(k) and an IRA might seem insignificant, but it can have serious implications when dividing assets. Additionally, during a divorce, there is a one-time opportunity to withdraw from a 401(k) without the typical 10% penalty—a detail that a financial professional will make sure is not overlooked.
Even more nuanced are the distinctions between retirement accounts, such as a Roth IRA versus a traditional IRA. Financial professionals are skilled at explaining these differences, helping you to understand the rules, restrictions, and potential benefits tied to each asset. Their role is not just about dividing numbers but making sure you understand what you are working with.
2) Cost-Effective and Comprehensive Professional Guidance
One of the key advantages of using a neutral financial professional is that they are typically less expensive than attorneys. They will take the lead in organizing and inventorying your financial landscape, flagging any potential issues that might go unnoticed by your legal counsel. This not only saves time but can potentially reduce costs, as the financial expert can dedicate more time to you and your spouse’s specific needs, ensuring no financial stone is left un-turned.
In many cases, you may have handled most of the finances during the marriage, while your spouse has little to no understanding of what assets exist. Financial professionals help bridge this gap by educating the less financially savvy spouse. They help to set budgets, understand current assets, and prepare for life post-divorce.
3) Tailored Projections and Smart Trade-Offs
Another key role for the financial professional is to run projections and assess future impacts of financial decisions made during the divorce. For example, they can help you understand the trade-offs between keeping the house versus keeping retirement assets. Will retaining the house be financially sustainable long-term? Should you consider liquidating assets instead? These types of questions require sophisticated forecasting, which financial professionals are trained to perform.
Final Thoughts
Collaborative Divorce is not just about dividing your family’s assets—it’s about making informed financial decisions that will impact you both for years to come. By using a neutral financial professional in your Collaborative Divorce, you ensure that you’re not just settling but pursuing an independent financial future.
Laura Bare is a partner with Emerge Wealth Strategies and is an experienced financial planner specializing in divorce situations, education and financial future planning. She can be reached at 773-412-3129, laura@emergews.com. You may also visit www.emergews.com for more information.
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
Laura is passionate about helping people through one of the most difficult periods in their lives. She takes a pragmatic yet compassionate approach, making sure the clients understand their finances and how decisions they make now inform their future.
When not working you can find her cooking, cycling, or working on an art project.
