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Financial Manager Magazine Recommends Collaborative Divorce Process
Divorce can do much more than officially shred a marriage certificate. The dissolution can create emotional bleeding that may never heal among the parents and the children, who must somehow move on with their lives. And the financial impact of blowing a marriage apart can leave behind as much destruction as a mushroom cloud.
Which is why an increasing number of attorneys, therapists and financial experts who work with divorcing couples are advocating that their clients choose a more productive and less hostile way to dissolve a marriage. The path less traveled is called the collaborative divorce process, which is growing in popularity across the country among professionals and their feuding clients.
While no one knows how many couples are terminating their marriages using the collaborative process, membership in the International Academy of Collaborative Professionals, which is an umbrella group for experts working in the divorce field, is doubling every year and is now close to 1,300. Professionals in at least 35 states have embraced the collaborative process. “The collaborative divorce phenomenon is growing by leaps and bounds across North America as the process is becoming more and more known,” says Bob Bordett, an IACP board member and a certified financial planner at Consolidated Planning Corp., a boutique investment advisory firm in Atlanta.
At first glance, the ground rules that an unhappy couple must agree to follow during this collaborative process may sound laughable for two people who long ago stopped sharing confidences, much less bathrooms. Couples who select this approach must agree in writing not to go to court or threaten to make that move even if things don’t appear to be going their way. A spouse who breaks that promise will quickly find him or herself all alone. The attorneys and other professionals, who had been guiding the spouse through each step in the divorce, will disappear.
The key word in this approach is collaboration, which means husband and wife must check their howitzers at the door. Instead, they agree to negotiate all aspects of the divorce. The aim is to break up in a way that strives to take into account the highest priorities of each spouse and any children. Mutual respect is crucial, and husband and wife are expected to be honest with each other. That means, for instance, if one of them was having an affair that made them want the divorce, that fact needs to be revealed. And obviously, hiding assets or being less than candid when talks turn to money is a no-no.
Keeping the divorce process civil can be a challenge. An embittered wife, who discovered her husband’s infidelity, isn’t going to be preoccupied with getting the cheater’s emotional and financial needs met. Which is why the collaborative process relies heavily upon a team of professionals who can keep the couple walking down the path to an equitable and emotionally healthy divorce while defusing the anger. If the couple can pull this off, they could increase their chances of not falling into the same trap again.
At first glance, the number of people necessary for this type of breakup might seem to rival Michael Jackson’s entourage. Each spouse will have an attorney, but the lawyers work together and share all information. In addition, the husband and wife ideally will have a divorce coach, who will help with emotional issues and get the process moving again when arguments occur.
Furthermore, a specialist will work with the children. Having a therapist or psychologist help the kids is important because they can be so traumatized by the breakup and fearful of losing one or both parents’ love that they will say whatever they think mom or dad wants to hear. A large body of research has shown that children of divorced parents, and particularly those who left on bitter terms, are more likely to abuse drugs and alcohol and have relationship problems as adults.
What’s also unusual with a collaborative breakup is that the couple shares a neutral financial specialist to sort out the money issues. This person could be a certified public accountant, a certified financial planner, chartered financial consultant or some other financial practitioner. The financial expert will look at a family’s entire financial picture before providing advice on how to value assets, such as pensions and stock options, and how to split them. The professionals who provide this service are paid by the hour.
Just how much the financial expert charges will vary by region and experience, but Bordett estimates that fees typically range from $125 to $250 an hour. Andrew K. Hoffman, a fee-based planner in Covington, La., who devotes a great deal of his financial practice to collaborative divorce, says he spends ten to 12 hours on a typical case.
One of the big perks for going the collaborative route is that a couple gets to make decisions jointly, on such things as child support, custody and what to do with the house, instead of relinquishing that power to a judge. The only court action occurs when the final paperwork is filed to obtain the formal uncontested divorce. Another advantage is that it levels the playing field for a spouse who was dominated in the marriage or who knew little about the family’s finances. Negotiable divorces, however, won’t work for everyone. It’s likely that a divorce will wind up in the courts if one or both spouses suffer from mental illness, experience drug or alcohol problems, or the marriage was disrupted by domestic violence.
With so many professionals involved in the collaborative process, you might assume that the cost will be prohibitive. That’s not necessarily so. The price tag will be higher than if a couple hashed out the divorce by themselves. Doing that, of course, could hurt one of the spouses financially. What’s more, the emotional and professional needs of the husband and wife probably wouldn’t be explored in a traditional divorce.
Working collaboratively can be much cheaper than waging a contested divorce that requires the court’s intervention. Stu Webb, a family-law attorney in Minneapolis who launched the collaborative law movement in 1990, estimates that a collaborative divorce will cost about a third of a garden-variety contested divorce. In contested divorces, court and legal costs can add up quickly. A couple of battling attorneys, for instance, might sit for hours in a courthouse waiting for their case to be called. Guess who pays for those billable hours?
Cinda Jones, a certified financial planner at Divorce Financial Solutions in San Diego, says she’s seen collaborative cases cost between $5,000 and $20,000, depending upon the complexity of the case. “People will say, ‘Yikes, that’s a big investment,’ but it could involve the biggest financial decisions they make in their whole lives,” Jones observes.
With roughly half of all marriages ending in divorce, plenty of opportunities exist to get involved in this financial-planning niche.
If you’re interested in learning more about collaborative divorce opportunities, a good place to start is with the International Academy of Collaborative Professionals, which is an educational and networking organization in Novato, Calif.
(www.collaborativepractice.com). The six-year-old organization has developed voluntary professional standards, including recommended training, for attorneys, mental health and financial professionals to bring some uniformity to this burgeoning field. One way to obtain specialized training is to earn the designation of Certified Divorce Financial Analyst through the Institute for Divorce Financial Analysts (www.institutedfa.com).
The IACP can also connect you to collaborative groups near you. The IACP knows of roughly 150 local groups, but it acknowledges that there are probably many more out there. Local groups will have their own requirements for new members and may be able to provide training opportunities. Joining a group in your area is only half the battle. After signing up, you’ll need to convince other members of your expertise. Once you earn the respect of your colleagues, they are more likely to invite you to work on a divorce case or suggest that a potential client choose you as the financial expert.
Hoffman says the best way to attract clients is to network with attorneys who practice collaborative divorce. He began meeting divorce attorneys by attending legal continuing education classes several years ago. “The lawyers couldn’t figure out why a non-attorney would be there, but I spent as much time with the attorneys as possible,” he recalled. Building trust among the lawyers was a slow process, but ultimately rewarding. “Family-law attorneys know each other very well, and in most areas they don’t easily accept outsiders. You have to prove yourself.” He got his break by offering to analyze pensions for divorce cases when he discovered that attorneys typically dislike dealing with defined-benefit issues because of the math involved.
In validating Hoffman’s experiences, Webb says he hesitates recommending other professionals until he knows them. He says newcomers would do well to take more established practice members out to lunch to introduce themselves and discuss their professional backgrounds.
Another resource you may want to sample is the ListServe group of collaborative practitioners, which was established by a former IACP board member. You can find the link to this group at the IACP Web site or by visiting http://groups.yahoo.com/group/CollabLaw/.
Before seriously exploring this financial niche, you should be aware of one potentially significant downside if you want to seek and maintain IACP membership. A divorce client, who is impressed with your work, can’t sign on later as a regular client. “If I’ve done a fabulous job and Mr. and Mrs. Jones loves me and the wife wants to continue working with me, I can’t because I’m neutral,” Bordett laments.
Once the divorce is settled, the client must contact someone else for ongoing financial help. The logic behind this prohibition is that it ensures that the financial professional doesn’t play favorites with husbands or wives who have indicated that they’d like to remain clients after their divorces are history. It also avoids favoritism allegations in the future, if the former couple needs to revisit their divorce agreement. When this issue arises, Bordett recommends other financial professionals. He, however, is on the referral list of colleagues, who face the same limitations.
Despite this drawback, Bordett is sold on collaborative divorce. The process, he says, “provides the best way to split up. I enjoy being able to help people by being able to work outside the box.”
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