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Collaborative Divorce Solutions of Orange County

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Financial

The Role of the Financial Professional… After 1995 If You Live in Ireland

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By Amy Clews, CPA, CDFA, CVA, CFE Addleman & Associates
www.addlemancpas.com

Why do we need a financial neutral in our Divorce?

The month of March is upon us, and many of us are looking forward to St. Patrick’s Day and celebrating all things Irish; however, did you know divorce in Ireland was not even legal until 1995? And if you’re struggling with the six-month waiting period in California, imagine waiting three years in Ireland where divorcing couples must live apart for two of the last three years before they can divorce.

How will a family potentially support two households both temporarily and in the long-term when finances are separate? How will an equitable settlement be achieved so the family can move forward amicably? These are only a few of the financial questions divorcing couples must consider.

In the collaborative process, the financial professional is there to help the couple address financial issues such as: 1) assisting with gathering financial documents, 2) preparing financial analyses, 3) presenting financial analyses to the collaborative team and the couple, and 4) assisting with financial planning for the future. The financial professional will help you plan for the agreements that you decide will work best for your family moving forward.

The financial professional is able to help with various financial analyses depending on your financial needs. Some of these analyses include…

Assisting with Gathering Financial Documents

The financial professional will provide a document request list that details the information and documents requested to complete your financial analyses.

Marital Balance Sheet

What do you own and what do you owe? An assets and debts analysis will help the divorcing couple determine what needs to be divided after considering the tax implications of those assets. For instance, it is important to consider a retirement account is not equal to a cash account.

Income Analysis

How much income is available to provide spousal and child support? An income analysis determines what historical income levels have been for the family. Income sources can include many items such as wages, business income, interest income, dividend income, tax-exempt income, equity awards, and other sources of income.

Needs Analysis

How much money do you need to pay your expenses? A needs analysis is essentially a budget. This budget looks at historical spending and estimates future spending as well.

Tracings

Do you have separate property that is included in your marital balance sheet? If so, tracing may need to be completed to determine the source of monies used for a current asset.

Business valuation

What is our business worth? The financial professional can help determine the value of the business and provide alternatives for owning that business going forward.

Projections

What does my financial future look like? During the collaborative process, the financial professional can assist in researching different financial alternatives to see how different agreements may affect your financial future.

The collaborative process allows you to find your solutions that serve your family. These creative solutions would not be offered in a true litigation environment. A collaborative process also keeps your financial information confidential, which can help heal your family as it moves on to the next chapter.

The Best Kept Secret to a Successful Collaborative Divorce: Utilizing Coaches, Child Specialists and Financial Neutrals to Focus on Interests and Manage Emotions

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By Paula J. Swensen, Esq.

As family law collaborators and mediators, we know all too well how the emotional aspects of a divorce can threaten to derail what often begins as a stable and effective process toward a peaceful resolution of our clients’ family law disputes.

Clients come to us for help in resolving their family law matters with the hope and intention of staying out of court.  This is a laudable goal, and most everyone comes with the highest intention of achieving that goal.  But then, something quite predictable happens… and if we collaborative professionals are not ready for it, the entire process can be unexpectedly hijacked, thereby posing a threat to the successful outcome for our clients and their families.  The ‘something’ that invariably shows up is our clients’ deeply held emotions about the unraveling of their marriages, including all of the uncertainty and fear that accompany such momentous changes in a person’s life circumstances.  As we know, once strong emotions enter the picture, it is quite challenging to remain in option-creation and problem-solving mode during the collaborative or mediation process.  However, that is what we must do, relying effectively upon our best kept secret, the “neutrals”.

 

Who Are the Neutrals?

We refer to the “neutrals” as those members of the collaborative team that are exactly that — neutral.  They are not advocating for either client, but rather, they serve to facilitate the successful outcome of a collaborative divorce through their professional roles as: financial neutral, child specialist, or as a single coach for both clients.

 

Why So Many People?

We are often asked, “why do I need so many people in my collaborative process”?  Understandably, prospective clients new to the collaborative process are wary of paying “so many” different professionals on the collaborative team.  It soon becomes clear to our clients just how invaluable the neutrals are to the successful outcome of a collaborative divorce.  Because the effective use of neutrals often dictates the likelihood of success, they are indeed, the “best kept secret” of the collaborative process.

Most clients do not think twice about the necessity of employing and paying for a lawyer to advocate on their behalf in a divorce.  While we lawyers enjoy a vital role on the team, it is often the work of the neutrals that makes the difference between a successful outcome or one that falls short.  Why?  Because sometimes when clients get stuck in the mud over a challenging issue, their advocates get stuck right along with them.  While this is certainly not desired, it is not uncommon for an advocate to get caught up in the strong emotions of his or her client during the divorce process.  It often takes someone who is not advocating for either client to better explore and explain options for breaking an impasse so that the matter may continue to move forward.  In this way, the neutral can play an instrumental role to enable the clients to reach a mutually-satisfying resolution.

 

When and How Are the Neutrals Best Utilized?

Question: When is the best time to utilize the neutral professionals?  Answer: Early and often.  It is highly recommended that the neutral professionals be made part of the collaborative team at the commencement of collaborative process.  In this way, they show up at the “collaborative table” as equal members of the collaborative team along with the lawyers.  This pays dividends throughout the process as the neutrals are vested, from the outset, with no less credibility and gravitas than their legal counterparts.  This allows the clients to have confidence in the input of the neutrals from the very beginning.

Our neutral professionals fulfill a vital role when it comes to managing and overcoming the emotional obstacles presented in a divorce.  For example, where an impasse can arise over the amount of support or whether the couple should sell the family home, the financial neutral can often be the secret weapon in helping the couple to break the impasse.  Where a spouse can get bogged down in all of the emotion surrounding wanting to stay in the marital residence, the financial neutral can explain the numbers in such a way as to help a client to visualize whether staying in the home presents a viable option or not.  The input of the neutral is future-focused and geared toward helping to solve the problem, rather than in furtherance of any position.  The coach or child specialist operates in the same manner.  They bring credibility, option-creation and problem-solving to the table in a way that the clients can trust in their unbiased input, especially if the neutrals have been involved from the outset of the collaborative process.

 

Neutrals-The Secret to Success

As has been proven, the collaborative model works so well because all of the members of the collaborative team play a critical role in the success of the collaborative process.  We know that emotions can run high during a divorce.  We also know that emotions can get in the way of rationality, and the ability to access the cognitive areas of our brain, which is critical for effective problem-solving.  That is precisely why the use of neutrals is one of the best-kept secrets to success.  As impartial and unbiased members of the team, they are best-suited to help clients move past the emotion of a given impasse, and to focus on feasible options to obtain an optimal outcome for their families.

“I Just Need to Win”… How Collaborative Professionals Can Help Shift the Paradigm

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By Paula J. Swensen, Esq.

Those of us of a certain age remember the immortal words of a successful football coach after whom the Super Bowl trophy was long ago named.

Vince Lombardi famously opined, “Winning isn’t everything… it’s the only thing.”  That’s a pithy and fitting philosophy for a coach to use to inspire his or her team to attain greater and greater success on the football field, but we collaborative divorce professionals know that it is not so useful when it is applied in the context of a divorcing couple.

It goes without saying that everybody wants to win.  No one wants to lose, regardless of the undertaking or the endeavor in which one is engaged.  We know intuitively from a very young age that winning is “good,” and that losing is “bad”.  We all want our team to win, and we become frustrated and sometimes angry, when our team loses.  We all know from following sports that when there is a winner, there is also a corresponding loser.

This concept of “winning” is ingrained in our being from an early age, and it has now saturated our culture.  We want winners, not losers when we choose employees, spouses, friends and professionals such as doctors and lawyers.

As a certified family law specialist who has litigated, and also mediated many divorces, it never ceases to amaze me when a spouse will say, “I just need to win.  You have to help me WIN!”

At such times I am compelled to ask, “What do you mean by “win” your divorce?” “What is a win?” “What does a win look like to you?”

Those of us who have dedicated our practice to helping couples finalize their divorces in a more peaceful manner, know that we can bring a much-needed paradigm shift at the beginning of their divorce process to better assist a family transitioning from one household into two separate households.

Our first challenge is often to help spouses understand at the outset that a divorce is not a zero-sum game in which there is one “winner” and one “loser”.  Given the near-automatic reflex to think in those terms, it can take some work to dispel that ill-fitting notion.  Yet, helping to shift the focus from that initial mindset of needing to “win” to one where a spouse can appreciate the benefit of achieving an outcome that is, instead, in the best interest of the family as a whole, cannot be overstated.

As we are well-trained to do, focusing on concerns that each may have rather than focusing on positions is likely to obtain a better outcome for the divorcing couple and their family.  We, as collaborative professionals can assist spouses to think slightly differently about this whole concept of “winning,” and to broaden their outlook to include the well-being of their entire family.

How do we help a couple create a “win/win” mindset based on a balanced outcome?

What if a “win” meant using the funds that would have been spent on contentious litigation to instead put toward the children’s education?

What if a “win” meant the ability to stay in the marital home for a period of time so that the children would not be displaced from their school and their friends?

What if a “win” meant that both parents could attend a child’s milestone events: recital, birthday, holidays, special occasion party, graduation or wedding without the child being forced to choose one parent’s attendance over the other?

What if a “win” meant that each spouse was able to move beyond the divorce with a positive outlook for his or her future?

The collaborative professionals have a unique opportunity to assist the transitioning couple to discard the mindset of divorce as a zero-sum game, and to embrace the concept of finding resolutions that are in the best interest of the whole family.

Mr. Lombardi’s familiar adage should rightfully be relegated to the football field, as it serves no useful purpose in helping couples to achieve a peaceful divorce that best meets the needs of their family.

The Advantage of Child Support Calculation Through the Collaborative Divorce Process

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A recommended article written by Leslee J. Newman, Collaborative Attorney, Mediator, and Family Law Specialist

“A divorce with children who are not yet adults includes decisions regarding child support payment.  In every state including California, there is a different formula to calculate child support.  If divorcing parents go to court and request a judge to make the child support order, the statewide formula must be used to arrive at the amount of the support to be paid from one parent to the other.  Find out how parents selecting an out-of-court process like collaborative divorce can create their own agreeable amount without going to court.”

Click the link below to read more.

https://divorcepeacemaker.com/blog_index/the-advantage-of-child-support-calculation-through-the-collaborative-divorce-process/

Horror Stories of the Delayed Divorce

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A recommended article written by Diana L. Martinez, Collaborative Attorney, Mediator, Lecturer & Trainer

“As we enter the holidays, many divorcing couples choose to put their divorce on hold, preferring to focus on more enjoyable aspects of the season.  Unfortunately, this can make for a horror movie later on.  Before you slow things down, understand the potential nightmare lurking behind delays in your divorce, and how you can create a safer way to give yourself a much needed respite this holiday season.”

Click the link below to read more:

https://www.hbplaw.com/blog/2019/10/horror-stories-of-the-delayed-divorce/

Do I need a financial specialist as well as a lawyer for my divorce?

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By Cathleen Collinsworth, CDFA®, MAFF®
www.cccfda.com
949.262.3692

 

Do I need a financial specialist as well as a lawyer for my divorce?  Won’t I be paying twice the money for two professionals to be doing the same work?  As in all questions relating to divorce, the answer is, “It depends.”  If the marital estate consists of assets such as a residence, retirement accounts, investments, and or credit card debts, you should consider hiring someone to assist you in fully understanding all the financial issues relating to the marital estate.

Misinformation and misconceptions about the divorce process can be detrimental.  Many have false expectations that they will be able to secure a divorce settlement allowing them to continue with their accustomed style of living.  Financial divorce analysis helps to ensure a good, stable economic future and prevents long-term regret with financial decisions made during the divorce process.

The financial work provided by a lawyer is not the same as that provided by a trained financial professional specializing in the divorce process.  In addition, being a CPA or a CFP does not mean that individual has specific training in family law financial matters.

As you go through the divorce process, finding the right professional to help you can become challenging.  Do your homework.

  • Find a financial analyst who has experience in family law.
  • Find someone who knows that there can be significant tax implications when the parties divorce.

A Certified Divorce Financial Analyst (CDFA®) is someone trained in finances who has also taken financial courses specifically designed for the knowledge relating to divorcing couples.

 

Remember Assets Are Not Equal

Example 1:

Swapping a $50,000 interest in a joint savings account is not the same as receiving a $50,000 interest in a 401(k) plan.

There are no tax consequences to withdrawing the money from the savings account.

There will be current tax consequences as a result of withdrawing money from the 401(k) plan: You will pay ordinary income taxes on the amount withdrawn and, depending on the circumstances, you can pay a combined 12% penalty.

Example 2:

Swapping the family residence with $100,000 of equity with a stock account that currently has a $100,000 capital gain is not equal.  If the family residence is sold there could be no capital gains tax owed because there is a $250,000 ($500,000 if married) capital gain exclusion relating to the sale of the family residence.

Stock with a cost of $100,000 is sold for $200,000.  Gain of $100,000 could be taxed as high as 23.8% for the Federal Government or $23,800 thus leaving cash available of $76,200.

As you navigate through the divorce process you can make better decisions when you are fully informed of the impact of your financial decisions going forward.  The decisions you make now can impact your future financial status.

As you can see, not hiring the right financial professional can be costly.  Don’t roll the dice and hope for a good outcome.

Please do not hesitate to call if you have further questions, comments or would like additional information.

 

© 2018 Cathleen Collinsworth, CDFA®, MAFF® Cathleen Collinsworth is a CDFA®, Certified Divorce Financial Analyst, and a MAFF®, Master Analyst in Financial Forensics, who has been practicing as a sole practitioner in Irvine since 2000.  She has been retained as a forensic accountant and expert witness to provide services in family law for 20+ years.  As a member of Collaborative Divorce Solutions of Orange County (CDSOC) since 2007 she has provided services as a Neutral Financial Specialist and team facilitator.  Cathleen has served on the Board of Directors of CDSOC and served as the President for 2016-2017.  She has extensive training in mediation and the interdisciplinary team model of collaborative practice and frequently mentors’ collaborative practitioners.  She has authored articles, presented seminars, been a guest speaker and has prepared instructional videos in the field of finances and family law during the last 20 years.  She currently serves on the Collaborative Divorce Education Institute’s Leadership and Training team and is a frequent trainer at the annual conferences of Collaborative Practice California, the International Academy of Collaborative Professionals, the Association of Family and Conciliation Courts, and other professional conferences throughout California.  In 2015 Collaborative Practice California (CP Cal) awarded Cathleen the Eureka Award, which recognizes those who have made significant contributions and demonstrated an abiding dedication to establishing and sustaining Collaborative Practice in California.  Cathleen also serves as a CP Cal Delegate and is a member of the International Academy of Collaborative Professionals (IACP).  A detailed list of her training can be found at https://www.collaborativepractice.com/members/2328.  For additional information, please visit her website at www.cccdfa.com.

Why a Collaborative Pre-nup Makes Cents

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by Suanne I. Honey Attorney at Law, CFLS, Mediator and Collaborative Attorney

Sorry for the silly pun when this is such a serious topic. Seriously, though, pre-nuptial agreements are hot topics which give rise to many emotions.

“It paints the Devil on the wall.”

“It is anticipating failure of the marriage.”

“If he or she really loved me, this would not be necessary.”

“I am uncomfortable talking about finances.”

The list can go on and on. Sometimes emotions are an unnecessary waste of energy. Other times emotions have some benefits, even negative emotions. For example, fear in a dark alley in a dangerous neighborhood will cause you to be zealously vigilant about your surroundings which will lead you into taking appropriate steps for your safety … much like the pre-nuptial agreement itself.

Unfortunately, statistics today are not favorable for a lasting marriage. If and when there is a decision to get divorced, the person you once loved turns into the enemy. There is often a total lack of trust at the time of a divorce. There are fights over money, property, and other issues creating stress for both partners. This stress almost always filters down to the children.

Collaborative Law is a process where couples work with a team of expert professionals.

The mental-health professionals work individually with each partner to a marriage (or a potential marriage). They help curb their emotions and phrase their individual needs and wants in a positive, cooperative and logical way, allowing those needs and wants to really be heard and understood by the other partner.

The financial professional will be able to identify and sort out the financial and property issues of concern to the couple in a transparent and logical way.

The Collborative Practice attorneys will help guide their clients through the legal quagmire. This can all be done in a much less stressful, more cooperative way in the collaborative arena.

While important, none of that is the real reason that Collaborative pre-nups make the most “cents.”

The biggest reason for marriages to fail is the breakdown in communication. Having gone through a divorce in the Collaborative law process, many (if not most) participants say if they’d gone through this process before the marriage, the divorce would be much less likely.

So it makes “cents” to have your pre-nuptial agreement created in the Collaborative setting. Because of the communication skills learned by the couple during the process, it may help avoid a future divorce altogether. This saves a great deal of “cents” paid to attorneys and litigation, or future Collaborative Divorce costs.

Even if the unthinkable happens and there is a future divorce, you will come out ahead. Having learned how to conduct difficult conversations in a way that allows your spouse to hear and understand your position, even discussing issues in the divorce process that were not part of the original prenup will save many “cents.”

Most importantly, the stress level exposed to any children during your divorce will be significantly reduced. This is an outcome which is “priceless.”

Experts Contribute to Best Practices at Collaborative Practice California Conference

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Orange County Collaborative Practice professionals will share their expertise with colleagues in April at the annual Collaborative Practice California Conference XII in Redondo Beach.

Members of Collaborative Divorce Solutions of Orange County (CDSOC) are in demand as professional education panelists and seminar leaders throughout Fall 2017 due to their expertise and experience working with a diverse array of Orange County clients in the Collaborative approach to divorce.

“Many collaborative professionals are committed to continuing professional education in order to provide the best service to our clients,” said Dr. Carol Hughes, CDSOC member and workshop leader. “The annual conference of Collaborative Practice California is one venue for us to do this.

“We CDSOC members are honored to be contributing to the further growth of our Collaborative colleagues throughout the state. Ultimately, the reward is offering better options to clients who want to avoid the trauma, time and expense of a litigated divorce or other disputes,” added Dr. Hughes.

Collaborative Practice California presentations include:

Left to right: Cathleen Collinsworth, Carol Hughes, Bart Carey

Collaborative Family Lawyer and Mediator Bart Carey, Divorce Coach and Child Specialist Dr. Hughes, Ph.D., LMFT, and Financial Specialist Cathleen Collinsworth, CDFA™, MAFF™ will facilitate an advanced seminar titled “Grand Rounds for Collaborative Practitioners.”

The workshop format introduces the “Grand Rounds” concept used in the medical profession. A supervising physician-professor and small group of residents visit individual patients in their hospital rooms, diagnosing their symptoms and discussing together how best to help each patient through collaborative problem-solving.

In a similar way Bart, Carol and Cathleen will apply their expertise to analyze individual case challenges presented by participants. The team will “diagnose” and assess the symptoms and prescribe the best course of action.

As a result of the workshop, the attendees will learn how to analyze case challenges presented by their own clients, and then design and implement creative solutions on their behalf.

Collaborative family lawyer and mediator Diana L. Martinez will present a workshop on diversity and cultural issues in divorce.

Collaborative Family Lawyer and Mediator Diana L. Martinez, will co-present a seminar with other California Collaborative professionals discussing cultural competency in family law practice, “Becoming Culturally Competent and Ethically Responsible: Beyond Basics.” Professionals working with families going through divorce and separation need to increase awareness and skills to discern the complex aspects of culture, world views, and communication patterns of the families they interact with during the legal process.

Participants will also learn to identify sociopolitical aspects of racism, power and privilege, and how these may impact issues of trust and create barriers while navigating the legal process. Being able to empathize and navigate these challenges will lead to greater understanding of client needs and achieve a successful outcome without resorting to litigation.

Patrice Courteaum M.A., LMFT, Divorce Coach and Child Specialist

Licensed Marriage and Family Therapist, Divorce Coach and Child Specialist Patrice Courteau, MA, LMFT, will participate in a panel discussion about effective Collaborative Practice outreach in a digital age.

Orange County families who are considering a Collaborative approach to their divorce can be confident in the guidance and qualifications of CDSOC members, who not only uphold high standards in their personal practice, but who are called upon to help California’s Collaborative professionals develop the highest standards in this area of family and civil law.

CDSOC members are available to speak to groups of professionals and to any interested organization or program about the Collaborative Practice approach to solving dispute in family law matters or any civil dispute instead of resorting to time consuming, costly litigation that destroys ongoing relationships. Contact CDSOC at 949-266-0660.