Imagine trying to sell your home if you have no idea what the current market value is.
One of the first things you do when you decide to sell is contact your real estate professional who will then do their work to discover what your home is worth, so you know what you are negotiating for. Selling your home without an asking price is like giving all the power to the purchaser who can offer you any price. Without a benchmark to work from it’s just you versus the buyer.
In divorce, the approach to negotiations is often an “us versus them” mentality. The divorcing parties have forgotten that their marriage used to be an “us” situation. All that goes out the window.
The first step in the divorce process is to prepare a statement of your financial facts, you cannot begin to negotiate until you have accurate, complete financial information, a financial benchmark to work from.
Unfortunately, it is too common for unadvised divorcing couples to negotiate with an incomplete settlement proposal.
A woman I worked with received a proposal settlement from her husband, a successful businessman. The proposal was all words with no values attached to any of the assets. She asked me to read it to ensure there were no financial pitfalls, such as potential capital gains taxes, that she should be aware of before signing. On the surface it appeared generous but closer examination revealed that he neglected to include the value of his business. A business started during the marriage and definitely a marital asset. We advised our client to hire a business valuator, who would be able to analyze the business and place value on this asset.
Once we had the value of the business we were able to effectively evaluate her husband’s settlement proposal.
Successful negotiation of a settlement agreement involves both parties:
- Giving complete cooperation and full disclosure in listing all their assets and debts.
- Considering the needs of the entire family.
- Constructing an agreement that truly reflects the needs of the entire family.
Tesia Brooks CFP® MFA™ CDFA™ successfully completed the course material for “The Financial Aspects of Divorce”, passed the examinations and was awarded the CDFA™ designation in the spring of 2010. She has a professional financial background that spans 40 years, graduating as a Certified General Accountant in 1991 and being awarded the Certified Financial Planner (CFP®) designation in 1998. Tesia has experienced divorce first hand giving her personal insight and compassion for those who are going through the experience of divorce.