The Divorce Industry's Little Fib

"There is a myth that still persists in the minds of many couples. That fighting it out in court will get one of them a better result."

“Psstt.. I understand from my sources that you don’t want to be married anymore. Hey let me tell you, you got to fight it out, get what you can before you lose everything! I know someone that for just a small retainer they’ll take care of you. I’ll hook you up.”

Yes, I know, nobody meets strangers in a dark alley to get connected with divorce professionals, but the truth is that much of the divorce world is rooted in a myth: that what you get in your financial settlement is based on tactics and how hard you fight. It is simply not true, yet many people end their marriage thinking this way, resulting in drained bank accounts, destroyed relationships, and sleepless nights. It is time for it to stop.

No Fault Divorce Changed the Game

All states now have no-fault divorce laws: every one of them. And they all have at their core the goal of fair and equitable distribution of property, meaning that when you come to the end of a divorce your settlement is going to be more or less an even split of assets. The only question is whether you get to that point the hard way or the sensible way.

The hard way is to start the process with the idea that your spouse’s behavior will help you get a better settlement; that the system will punish them and reward you with more assets, income, and whatever else you ask for. It doesn’t generally work that way. Courts are required to look at multiple factors, most of which do not relate to how awful your spouse has been as a husband or wife. Yet a lot of time and money is spent documenting bad behavior, and going endlessly back and forth in negotiations, to arrive at a close to 50/50 split that could have been figured out with a little analysis and planning.

Attorney’s Are Still Needed

Now, don’t get me wrong, attorneys are essential in most divorces if only to make sure an agreement is properly written and reflects your wishes. They can also advocate for you and use the power of the courts when you have serious concerns you can’t work out such as when a spouse is hiding assets, or if you can’t agree on alimony or other essential spousal support. Also if you can’t see eye-to-eye on what assets are worth (like a business or collectible car), or are worried about the protection and welfare of your children, a lawyer and the courts may be the place to go. But for most people, even those that don’t get along well, there is a tremendous benefit in having a methodical and planned approach to ending your marriage.

Mediation is a Partial Solution

So is mediation the answer? Mediation has changed divorce for the better but it is only a partial solution.  Many people choose mediation thinking that they will walk through all of the settlement options available and logically choose the best one. It doesn’t work that way. A mediator’s primary role is to facilitate communication and discussion, and get a couple to agree on whatever they choose to agree on.    Some mediators will bring in neutral financial specialists to help untangle financial issues as they are recognized. But what if they aren’t recognized in the first place? It is asking a lot for couples to do their own long term cash flow and net worth analysis, know the intricacies of the tax code as it applies to divorce, and compare competing proposals. Aye, there’s the rub.

 “Divorce Planning” is the Answer

So if the courtroom is unnecessary for most divorces and mediation is a partial solution what is the answer? It is a new approach which I generically call “divorce planning”.

It isn’t a revolutionary idea. In the world of financial planning we have nice little systems for getting people retired, kids to college, and our stuff given away properly when we die, but not for the one life event that 50% of us are likely to experience.  In the absence of a well-defined planning process people have been forced to “wing it” with disastrous financial consequences. In fact three out of four divorced people wished they had better financial advice during their divorce.[1] Divorce planning fills this need.

Divorce planning takes the supportive communication environment offered by mediation and adds the process and expertise needed to needed to build a truly tailored settlement. Needs are assessed, options are defined, and decisions are made based on what makes the most sense.   All parts of a divorce agreement, whether they relate to money or children, can be worked out step-by-step.

On the financial side a divorce analyst would help the couple identify their financial issues and priorities, determine the best way to divide assets and pensions, calculate the optimal blend of child and/or spousal support, decide what to do with the marital home, and make decisions on their financial future both large and small. In the end, long-term net worth and cash flow projections would clearly illustrate how their final settlement supports the needs of each spouse today, and years down the road.  All of this exists today and is the work we do.

But divorce planning goes well beyond finances. In addition to financial analysts like ourselves, there are parenting specialists, legal consultants, tax and debt experts, valuation experts, and a host of others that can be called in to guide the couple in making decisions right for them in all facets of their divorce agreement. 

Divorce planning is already here in many ways.  It isn’t new, just not particularly well organized...yet. We have the talent and the tools but what is still evolving is the coordinator: a single point of contact who can direct the process. But that time is coming. 

Conclusion

There will always be a need for divorce lawyers and courtrooms as long as there are intractable issues that can’t be resolved amicably. But it is a myth that there is a big benefit to fighting it out in court. Don’t do that unless you have to. Rather than spending a lot of time and money so a judge can decide what your “fair and equitable” should be take the sensible route. Take control and build one that is truly right for you. Plan your divorce, don’t fight it. And stay out of dark alleyways.

[1] Survey done by Wentworth Planning Group November 2014.