The Financial Professional’s Role in a Collaborative Divorce

In collaborative law cases, financial professionals, such as Certified Public Accountants (CPAs), assist the parties in organizing and working with financial information. They assist the parties to gather, organize, list, understand, and analyze financial information that is relevant to the case. They provide specialized financial and tax advice concerning the impact of legal decisions on each party’s current and future financial condition.

With their training and expertise, financial professionals also offer a depth and quality of analysis regarding issues such as business valuation, property classification “tracing” issues, the effect of divorce resolutions on long-term financial and retirement planning, and tax impacts. Many times this involves an explanation of the numbers, the basis for calculations, and the range of options and values thatthe parties and their collaborative attorneys may wish to consider in reaching agreements.

What can the financial professional do to help you?

The role of a financial professional can be tailored to the individual circumstances and needs of the parties. In an interdisciplinary collaborative divorce, the financial professional can help the parties in the following ways:

• Assist the parties to organize financial information by discussing the financial issues and explaining the nature and sources of financial information needed.
• Help the parties to reduce anxiety about the financial issues by informing them and their collaborative attorneys of the various financial and tax effects of possible property division scenarios. This might include individual meetings with the party who desires more confidence and sophistication when addressing financial concerns.
• Encourage the parties to design realistic plans for future cash flow.
• Meet jointly with the parties to explain financial issues and to help ensure that everyone on the collaborative team is “on the same page.”
• Analyze and evaluate financial issues by preparing charts, analyses, financial projections, calculating present and future values and computing income tax effects.
• Provide financial information to the parties’ collaborative attorneys and their clients in a manner consistent with the collaborative process for use in brainstorming property division that addresses the needs of all parties.
• Prepare financial schedules that reflect ideas for property division.
• Offer insight on the financial effect of various scenarios, such as long-term options for retaining the home or preparing for eventual retirement.
• Explain the options to consider in cases in which one item dominates the total property, such as a closely-held business interest.

In the collaborative process, financial professionals are compensated strictly on a fee for service basis. Therefore, their compensation for their involvement in the collaborative process cannot be tied to the sale of investment products, investment advice nor receipt of commissions. CPAs traditionally bill on an hourly basis, which is consistent with the collaborative process.

© Tracy Stewart · tracy@tracystewartcpa.com · 979.324.8179 · 426 Tarrow Street, Suite 101 · College Station, TX 77840