Guest Blog – Laurie Itkin: How a Financial Advisor Can Assist You in Mediation

Mediation is a terrific alternative to working with a traditional lawyer and can save you quite a bit of money in the divorce process.

Related: Which Type of Mediation Will Work Best for You? The Three Types – Explained

One thing you need to know before working with a mediator is that mediators can provide legal information but they cannot in their roles provide legal or financial advice to either party. If you believe your understanding of your household financial situation is limited, or if you do not feel you have a good handle on how to manage debt or the investments in your brokerage and retirement accounts, then I suggest you hire a certified divorce financial analyst (CDFA).

A CDFA provides information that enables you to advocate for yourself and negotiate a settlement or separation agreement that will meet your current and future financial needs.

A CDFA can help you:

  • Gather information about your financial situation;
  • Analyze your spouse’s disclosures;
  • Suggest different ways to divide assets fairly;
  • Obtain accurate data for use in child support and alimony calculations; and
  • Forecast the short and long-term financial implications of proposed settlement options.

When it comes to calculating child support or alimony (which may be called maintenance or spousal support, depending on the state), CDFAs can review tax returns and other documents to identify income sources available for support. Determining income available for support can be complicated if one or both spouses earns income that varies from year to year.

CDFAs generally charge an hourly rate, but that depends on the CDFA. After charging by the hour for several years, I realized that my clients wanted to be able to call, text or email me between our scheduled meetings without having to worry about every 15 minutes here and there adding up to extra billable hours each month. While clients can still pay for my CDFA services by the hour, I launched MediationMoneyMentor.com to provide financial analysis, planning, and support for 60 days at an affordable flat rate.

These are my four tips for obtaining a favorable financial outcome in mediation:

1. Ensure Your Financial Affidavit is Accurate and Complete
One of the first steps in the mediation process is for you and your spouse to complete financial affidavits. Terms and requirements vary from state-to-state but generally you and your spouse will be required to disclose your separate and marital assets and debts, and information about your income and expenses.

These forms can be overwhelming but it is important that they be accurate and complete. If not, it will be impossible for assets and debts to be divided fairly and mistakes in calculating child support and alimony could occur. You might struggle with providing even the most basic information if you haven’t been the one in charge of the household finances. Enlisting the help of a CDFA enables you to complete the forms much faster and you will gain a full understanding of the significance and value of each item such as a pension, life insurance, deferred compensation, stock options, restricted stock units, or non-publicly-traded investments.

2. Understand What Each Asset is Really Worth
Some mediators have experience working on high net worth cases and have sophisticated financial expertise. Others do not. A CDFA can help you evaluate what everything is really worth so you can negotiate a fair division of assets. For instance, keeping a house with a large mortgage and home equity line of credit may be less valuable than half of your spouse’s pension. A Roth IRA is worth more than a Traditional IRA even though the balances may be similar. A brokerage account that contains securities worth $100,000 may be worth tens of thousands of dollars less once liability for capital gains taxes are factored in.

3. Be Open to Different Ways of Slicing the Pie
You and your spouse may have different financial priorities. Through mediation, you can come up with creative ways to slice the pie that best meets everyone’s needs. This is something that a judge may not be able to do. Having your CDFA model various scenarios — taking into account current and future values — can help you achieve a financially favorable outcome.

4. Consult Legal Counsel Before Signing Your Settlement Agreement
CDFA’s provide financial analysis – not legal advice. There will be times when you may need to consult a mediation-friendly attorney in order to be informed of your legal rights regarding property, child support, or alimony. The attorney will find the CDFA’s analysis helpful and will be able to zero in on the items that should be modified to make your martial settlement agreement even stronger before you sign it.

 

Looking for support from a CDFA in your mediation or divorce? Laurie is offering a $50 discount to the Hello Divorce community. Visit her website, MediationMoneyMentor and mention “Hello Divorce” when you contact her.

Comments

  1. I would just like to find a CDFA in my area (Hutchinson/Wichita, KS). Married 35 years still just separated (because I can’t make it financially on my own); He is paying most of the bills for now but he took our valuable gun collection, which was our biggest investment. I had a lawyer that wouldn’t help. Scared. Need advice. Thank you.

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