Wednesday, September 25, 2002
Splitting your differences with the help of a divorce planner
A story published today by the Arizona Republic reports that nearly 1 million marriages dissolve annually in the United States, and roughly one in two wedded couples will split within 15 years, according to federal statistics. This frequency has given rise to a sub-industry of financial advisers.
Attorneys certainly are key players in divorce proceedings, but financial planners also can play a role. A relatively new type of specialist called a "certified divorce planner" has been gaining recognition.
"This is all about regular financial planning, but under unique circumstances," said Charles Scott, a certified divorce planner at Divorce Dollars & Sense in Scottsdale.
Relevant financial issues dealt with by certified divorce planners include:
• Drawing up a budget, deciding who gets which debts and determining the impact on each spouse's credit record.
• Understanding the tax aspects of alimony.
• Deciding whether to back up those alimony and child support cash flows by purchasing a life insurance policy or even disability coverage on the person making the payments.
• Understanding the different tax angles to selling a home, liquidating an investment portfolio or withdrawing cash from a retirement plan.
"The thing they fight over most are retirement plans," Scott said. "People tend to say, 'It's our house but it's my retirement plan.' "
At a recent workshop that Scott conducted, one person in the audience asked who pays alimony if both spouses work. Another inquired about the tax implications of selling a home. Someone else wondered if it matters for tax purposes whether a divorce is completed this year or next.
Most attendees at these events are women, which may be because women tend to feel victimized more, Scott said, and they view the divorce process differently from men.
"Women tend to mourn the loss of the relationship first and, secondarily, come to see this as a financial transaction, too," he said.
"For men, the first reaction often is about how they can keep their stuff."
