Part 1 of a 2-Part Series
I recently heard the analogy, “Attorneys in a Collaborative Divorce are like the general contractors.” The lawyers know the law and what issues and problems need to be solved, but they do not have the level of financial expertise, nor the level of emotional expertise, that the couple will need to solve those problems. This is the reason why we bring in specialists and experts – the artisans – to help deal with the many details of the new family structure/entity that the Collaborative Divorce team is helping the clients to build. The lawyers have the responsibility to learn what the clients need so that they can bring the right craftspeople to the project. In this blog, I will discuss the expertise that the Neutral Financial Professional brings to the collaborative process. In my next blog, I will discuss the expertise that the Family Specialist brings.
I want a divorce financial professional on all of my divorce teams so that I can make sure the family’s post-divorce financial foundation is properly built and will be able to sufficiently provide for the couple and their family for both their short-term and long-term future.
What Is A Financial Neutral?
A financial neutral is an experienced finance and/or tax professional. Often, they are a CPA or a Certified Divorce Financial Professional (CDFP). In the Collaborative Divorce process, these financial experts do not take one side or the other–they are neutral and looking for financial solutions that are beneficial to both parties. They are helping the couple to design a financial agreement that works for their specific circumstances. The solutions that come from this focused design work is going to be better for both parties and their children than any adversarial court-ordered outcome can be.
The Financial Neutral will offer and help the parties to develop creative solutions for exchanging different assets and to maximize the income from those assets. I was involved in a Collaborative Divorce matter where the clients had created an irrevocable life insurance trust when their 3 children were young. At the time of the divorce, there was nearly $400,000 in cash value held in the trust, the children were in their thirties and the couple realized they didn’t have enough liquid assets to provide long term financial security for both of them. The CDFA on the team realized that they needed more liquidity and was able to shine a light on the reality of the situation. She was able to say, “Would you be open to finding a way to access those funds? I know your goal was to leave tax-free money to your kids, but you need those funds now because things have changed.”
It may not have been as easy for the Collaborative Attorneys to raise that issue. The financial professional is heard by the clients in a different way. The clients know, from the very beginning that it is possible for a neutral professional to be, in fact, NEUTRAL. The neutrals have no agenda other than to help the clients develop and look at all options and the probable outcomes of those options.
If you want to learn more about the Collaborative Divorce process and #NoCourtDivorce, contact New York divorce and family law attorney Andrea Vacca at Vacca Family Law Group, 212.768.1115.