My Forbes.com Articles

Steer Clear of Financial Advice from Friends and Family During Your Divorce

posted by admin 3:42 PM
Thursday, November 3, 2011

Imagine you are enjoying a wonderful evening at a five-star restaurant. You’d like to order a bottle of wine, but you’re not sure which one would best accompany your meal. Would you ask the bus boy or valet for their recommendation? Of course not! If you’re ordering wine at a five-star restaurant, you want the advice of the wine expert on staff. Naturally, you would turn to the sommelier.

The same logic applies to other aspects of daily life. If you have a problem with your car, you take it to a trusted mechanic. If you have a concern about your heart health, you consult a cardiologist, etc.

So, to whom should a woman turn when she has concerns about the financial aspects of her divorce?

The answer is simple: She should consult only with a professional divorce financial expert – someone who is specially trained to handle the multifaceted financial aspects of today’s complex divorce settlement agreements.

Unfortunately, that’s often easier said than done.

Why? Because when it comes to divorce, there’s no shortage of friends and family who are willing to lend their advice.

In fact, as I see it, divorcing women need to learn to make an important distinction. They need to learn: 1) where to get financial advice, and then, just as importantly, 2) where NOT to get financial advice. Quite frankly, the opinions and recommendations of friends and family can often be more detrimental than helpful. They all mean well, of course. But, this is definitely one of those instances where a little knowledge can be a dangerous thing.

To illustrate my point, here is my short list of people you should “tune out” if they start volunteering financial advice during your divorce:

1. Friends, family, or anyone who claims to have “been there” (or knows someone who has)

Lots of people have a divorce story to tell, and usually, they’re quite eager to share it.  In reality, though, no two divorces are alike. Even relatively fundamental things like differences in geography can have a profound impact. Just because a friend of a friend who lives in Silicon Valley received a settlement that included half of her husband’s tech company doesn’t mean you will get the same deal in your east coast divorce. (See my earlier post for more details about the differences between Community Property and Equitable Distribution States.)

Likewise, even though your cousin kept her marital home , that doesn’t mean you should. And, discussion about your stock portfolio can lead to a veritable minefield of misinformation, as well. Uncle Joe, who helped you get on the right track with investing as a twenty-something, just isn’t the right person to help you understand how dividing your current portfolio will impact your long-term financial well-being.

As I mentioned earlier, all of these people are well-intentioned, and there’s no doubt that they can provide support for you in other ways during your divorce. But, when it comes to advice about your finances, please learn to say, “Thanks –but, no thanks.”

2. A financial professional who doesn’t specialize in divorce

A CPA can file your taxes or give you a snapshot of your current and past financial status.  A typical financial adviser is hired to help you invest in stocks, bonds and mutual funds.  But should you rely on financial professionals like these during your divorce? No, you shouldn’t.

Instead, you need someone with a skill set specific to divorce finances.  A Certified Divorce Financial Analyst (CDFA) specializes in divorce finance and will carefully weigh each settlement proposal presented and project how it will affect your short- and long-term finances while calculating the tax implications for each scenario.

Keep this in mind: The US is home to more than 1 million accountants and some 320,000 financial advisors. But there are only about 3,500 CDFAs who are specifically trained in the financial aspects of divorce.

What’s more, many CDFAs have completed additional education and training. For example, in addition to being a CDFA, I have attended law school and have also completed dozens of advanced training courses in finance and divorce, including many of the same continuing education courses that are required for divorce and other attorneys (trust and estate, asset protection, etc.).

3. An attorney

Finding a firm that specializes in divorce/family law and dedicates at least 75 percent of its practice to divorce is a MUST.

But, these days, there are numerous critical financial tasks that are beyond the scope of even the finest divorce attorney’s expertise. For example, preparing financial affidavits and projecting the financial and tax implications of each divorce settlement option are now the purview of CDFAs.

Put another way, think of the CDFA as the financial quarterback of your divorce team. A CDFA is responsible for creating comprehensive financial analyses and projections so you and your divorce attorney can fully understand the short- and long-term financial and tax implications of each proposed divorce settlement offer. Then, your attorney can use that information to substantiate and justify his/her positions when negotiating with your husband’s attorney.

Without a doubt, if you’re going through a divorce, you’re going to get advice –whether you asked for it or not. The trick is to know which advice to heed and which advice to ignore. Get the specialized help you need by hiring a CDFA. They’re the professionals that can evaluate your financial circumstances before, during and after a divorce, while helping you plan for a secure financial future.

All content on this site/blog is for informational purposes only, and does not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.

 

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter  Pin It
Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • del.icio.us
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks


One Response to “Steer Clear of Financial Advice from Friends and Family During Your Divorce”

  1. Mr. Landers says:

    The purpose of this email is to express my opinion regarding the article you wrote for Forbes Online Magazine on Alimony Reform on July 12, 2011.
    Mr. Landers, obviously, you have never been married to an abusive woman who berates you in front of your friends, family and children, who belittles you with every opportunity she gets and constantly threatens you with the consequences of divorce for men; A woman who is verbally abusive to the point of slapping you on the face and treats you like a child.
    Please allow me to tell you that not all men are mean and abusive. I live in the State of New Jersey where, and as you may already know, the alimony laws are very favorable toward women.
    I was married for 23 years and despite the fact that the marriage was extremely painful and emotionally draining for the last ten years we were married, I stayed because I knew that my future was bleak if I ever file for divorce. This led me to an uncompromising depression and extreme anguish. My wife was mentally unstable and manic-depressive. This made my life a living hell. Even after I moved out of the house, I continued to pay the mortgage and worked three jobs. In the end, I quit one job and consequently could not afford to pay the mortgage. She then filed for divorce.
    My income is 2.5 times that of hers and I have the same job for over 20 years. At the beginning of the marriage, our incomes were comparable, but then I kept getting increases and she kept switching employers and her salary remained stagnant.
    The result of my divorce is that, I have to pay $900.00 in permanent alimony and half my civil service and military pension. This is exactly the type of outcome I was afraid of and threaded for many years.
    Mr. Landers, we are not living in the 19th century anymore and sewing circles have been extinguished. If you go to any college or university and take a peak in any higher education classroom, you will notice that the large majority of students are women. That is because more women elect to obtain a higher education degree than men. Is this a fact that the proponents of Alimony Reform have noticed?
    Many a times, I have witnessed unhappy couples living together, to the point where the husband lives in the basement and the wife stays in the bedroom. This is quite simply because; “It’s cheaper to keep her.”
    This is what matrimony laws do to people in this country. Couples are forced to live unhappy lives to the point where someone loses a temper and then it is too late.
    Furthermore, you failed to mention the fact that many women who receive alimony, have boyfriends and receive monetary support from them. Women who receive alimony can go on to live better lives, while the husbands, because of the financial burden, are not able to start new lives. Is this fair?
    And so Mr. Landers, Alimony is severely skewed and unfair to men. Some states such as New Jersey, have not kept up with times and treat male litigants as cave men and women like mistreated damsel-in-distress who need to be protected and supported for life.
    If we are proposing that women need financial assistance from men after the divorce, is the mere act of alimony an admission that women are inferior to men?