When divorcing, both parties need to understand their financial, emotional, and legal situations. For decades Stan Corey, author of The Divorce Dance, has been educating divorce clients about their financial situations and about the long-term implications of decisions they are making during divorce. When I talked with him on Family Matters, he talked about what people need to know and what kinds of professionals they might benefit from including as advisors during divorce.
We focused especially on the services a divorce financial advisor can provide. Hidden income was one topic. A tax return shows only the income that was taxable in the year to which it applies. The associated W-2 form may reveal considerably more real income, legally directed into retirement accounts, health care coverage, stock options, or deferred compensation. All of this additional income can affect alimony decisions and child support decisions. Income from investment properties and stock dividends should also be considered.
If one spouse has stock options, both may need help figuring out what they are worth. How else could they decide on a fair way to divide their value?
Retirement accounts can also be confusing. What appears to be $700,000 worth of equity in a piece of real estate does not have the same financial value as $700,000 in a retirement account. Maintenance expenses, tax consequences, and income-producing potential make their current and future values very different.
Stan’s novel, The Divorce Dance, tells a story of a stay-at-home mom learning about such financial matters while reeling from her husband’s announcement that he wants a divorce. The husband also has much to learn about financial information he thought he understood while he, too, goes through some emotional changes. The book provides a lot of education about assembling a team of professionals to help you during divorce and choosing an approach to divorce — mediation, collaborative law, or a hybrid approach. This educational material is wrapped in a story of characters you can care about. That makes it easier to take the educational information in.
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Stan Corey is a Certified Financial Planner™ (CFP®), Chartered Financial Consultant (ChFC), and Certified Private Wealth Advisor (CPWA) with over thirty-five years’ experience. He provides financial commentary at national conferences, in print and online publications, and on TV.
