“I really need to file for divorce…this just isn’t working. But, what do I do first? “
“I just got served divorce papers. Now what?”
“I have no idea what we have or where it is”
Dealing with divorce is likely to bring up some of your worst fears. That’s why it can be so hard to know what to do first. Your emotions can have you sobbing and racked with self-doubt one day and full of anger and resentment the next.
You’re talking to your friends to find an attorney. How much money is there? There’s so much involved even the most composed, self-reliant woman needs help.
Let’s start there. Help. Your friends will hold your hand and provide emotional support. Family members will rally to make sure you and your kids are okay. That’s a good thing. Lean on them on those days when you need it.
Getting divorced means dealing with legal issues too. Make sure to get your team hired to help you navigate this part of your divorce. Think of it as extended support.
Part of every divorce involves finances. It’s often the most contested and challenging part which is why you need to be prepared. Your attorney will be the public face of your legal support team. It’s critical to also have a financial analyst on your team as well.
Your First Step
Hire a trusted advisor that can help assemble your financial information for you. One that can help prepare your Statement of Net Worth. Depending upon your circumstances, you may need a financial forensic analyst. The financial forensic will dive into the details and prepare your Statement of Net Worth/Financial Affidavit.
The Statement of Net Worth (also referred to as the Financial Affidavit depending on the state you live in) is the information provided to your spouses’ attorney and the Court regarding what you spend and what your assets and liabilities (debts) are.
This is critical because it forms the basis for your maintenance (aka alimony) and child support, if applicable. This will be the starting point for the attorneys to determine your interim support and your final support. Know that you and your attorney sign this document under oath so it is a sworn legal document. It can be updated.
One of the first things you’ll need to do is gather all your financial documents. Tax returns, monthly bank statements and cancelled checks, and credit card statements are the easiest place to start. Next, be sure to get copies of wills and trust documents and statements regarding any additional assets. No two divorces are alike so your trusted advisor will tailor what is needed based upon your unique circumstances.
An attorney will not go through your information with a fine-tooth comb. They will question those items that look out of the ordinary, like an expenditure for $10,000 on alcohol and liquor. Don’t expect your attorney to know if you spend $100 a month on clothing or $800. I have had people tell me they don’t spend a lot of money and by the time my work with them is done, they’re shocked. Without my help, they would have severely underestimated what they need to support themselves and their children.
This isn’t something you want to estimate or do in a rush.
The Statement of Net Worth is quite detailed. And you should be as well. “Guessing” what your expenses are is a recipe for disaster! When individuals put together their financial information on their own, it’s common to see serious omissions and mistakes. It’s not intentional. Financial documents are complicated and it’s not easy to sort through if that’s not your area of expertise. A financial analyst is often brought in during difficult negotiations. They can help sort things out but it’s much harder to do especially if a spouse has tried to minimize their financial holdings or tried to hide assets.
What is the best practice regarding finances?
Before you get divorced, let me help you. With all due respect to attorneys, it makes better sense to have a financial divorce professional do your due diligence. Your financial expert will get the financial part of your divorce done with fewer problems which means less anxiety for you.
The financial side of a divorce should be treated like a business transaction. At the end of the day, the question is how much can I get out of this? That’s what I am hired to do in partnership with your attorney.
Why you need a specialist.
You may already have a CPA or accountant/tax preparer that you’ve worked with. They are not aware of the types of documents required during a divorce. Your financial advisor may not be familiar with the process either. Perhaps your accountant and financial advisor only dealt with your spouse. Will they be able to be impartial? Do they have any training and knowledge of what occurs in the divorce process?
I have seen, time and again, clients come to me after the fact because of financial issues that were not addressed during the divorce process. And it may be too late at that point. A divorce decree is in place and you signed off on a legal document. Or a decision was rendered as a result of trial by a judge and you would have to appeal the decision.
The best time to address the financial information is when you’re thinking about getting divorced. It gives you the time to gather the information and work with someone who has the knowledge to educate you on what you need and prepare the information for the attorney you will hire. What is it they say? “The devil is in the details”. Or, you may be already engaged in the divorce process and things aren’t adding up. It will save time, work and money on your part.
Know that I am laser focused on the money! Not only should you be educated on where you are, but you should have a sense of what your financial picture will look like after the divorce.
Have someone on your team who specializes in financial matters. Not only can I work with your attorney to prep all the information they’ll need, I can testify in court if necessary. I have had clients who had a “gut instinct” that something wasn’t right so they brought me in. And they were smart to do so!
Guest post by Rosalia M. Labate, CPA, P.C.