I am a licensed Arizona attorney, professional mediator, and Certified Divorce Financial Analyst (CDFA) who has practiced divorce law for almost 10 years. People make so many mistakes during their divorce process because they are misinformed or believe they can do it themselves. As a divorce professional, I would never:
1. "Do It Yourself" Divorce - So many people want to save money and do the divorce process themselves i.e. draft and file their own legal documents. What people don't realize is the amount of money you can lose doing it yourself. For instance, clients who file incorrectly and have their case rejected, resulting in unnecessary legal fees. Or the clients that don't understand the tax implications of their agreements and draft it improperly, leaving themselves open to an audit and unnecessary taxes. Always have a knowledgeable professional help you with your divorce.
2. Litigate When They Don't Need To - As a divorce is a legal process, most people think they need to hire their own attorneys and battle out their process in litigation. In reality, litigation costs the clients tens of thousands to hundreds of thousand of dollars unnecessary, and typically drags out their process for over a year. A vast majority of couples can use mediation to complete their divorce process. On average, mediation saves couples 80-90% on what they would pay attorneys in litigation, the process is drastically shorter, and in some states can prevent the couple from ever having to go to court or interact with a judge. Mediation is confidential and private, allows for unique agreements that fit your families' needs, and promotes a lower conflict process that is more psychologically beneficial for children than the traditional litigation (go to court) process. Mediation can also be used even when there is conflict between the parties. Mediation is not ideal in situations of severe domestic violence or other crimes, such as fraud.
3. Hire the Wrong Professional - Any professional you work with, let it be an attorney, mediator, realtor, mortgage broker, title company, coach, etc. should be an expert in divorce. This may seem odd to people, as why would it be important that even a realtor or mortgage professional understands divorce? Because your divorce impacts so many things in your life. It not only is a legal process that effects your relationship, but it also has an impact on your real estate, ability to qualify for loans, taxes, estate planning and beneficiaries, health insurance, all other insurance (home, auto, etc.) and more. These are what we refer to the "ancillary" issues touched by your divorce. So you want a team on your side that understands these implications and can provide you the best advisors.
4. Rush the Process - It is a common thing to hear in my office - "I just want to rip the bandaid off," "I just want to be done," and "I just need to get through this year." But rushing your process or only thinking short term will have a negative impact on you in the future. The financial decisions you make now will impact your finances for the rest of your life. So they shouldn't be rushed. Understandably, individuals and couples are focussed on just getting through the next day, month, or year, but you need to understand your longterm goals to make sure you are making decisions now that won't harm your plans for the future.
5. Not Understand the Numbers - Regretfully, many family law professionals, including attorneys, do not understand the financial implications of the agreements being reached. As an example, I was given a proposal from a client that was created by her attorney on her behalf. In the proposal, her spouse got the home and she got the retirement accounts. On a base level, they looked equal - her equity in the home was $200,000 and his balance of the retirement was $200,000. But this is ignoring a lot of major financial issues.
First, the equity in the home and the retirement accounts are not taxed equally, one being post tax and one being pretax. This means the values are not equal, as we have to reduce taxes from the retirement amount. So she is getting less than she should because the $200,000 has to be reduced for taxes.
Second, she is nowhere near retirement age. Meaning she won't be able to access the money (generally speaking with some exceptions) until she is 59.5 years old, or she gets hit with taxes and a penalty of about 10% to withdraw the funds early. So there is another loss for her. She is getting much less value from her $200,000 than her spouse is because her attorney didn't understand the finances. You need to work with someone who understand these financial implications.
Worried about the divorce process? Contact us today.
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