Legal Insight from the Barrows Firm: Financial Considerations Prior to Divorce

Addressing Financial Considerations Before Divorce Helps Family Lawyers Best Represent Clients

The two most common issues in a divorce in Texas are money and custody, and in this article, we focus on the important financial considerations before the divorce. When we talk about money, we include the values of property that must be disclosed in a divorce. Depending on your situation, you may be splitting the community estate 50/50 or using another method of fair and just property division. Texas is a community property state and that means that all the property acquired during the marriage is considered the property of both spouses subject to division. Alternatively, the property can be classified as separate property and the property can be addressed in a private contract such as a premarital agreement or post-marital agreement among spouses. Before you file for divorce, it is necessary to collect as much financial information as possible so that your family lawyer can advise you and bring in necessary financial professionals depending on your situation.

Talk to a Financial Advisor and Meet With a Family Lawyer

Financial advisors and family lawyers work together to help clients determine the best options for the family and their future. Some of the financial considerations before divorce involve joint debts and student loans, dividing up businesses during divorce, and divorce taxation regarding retirement accounts. For example, if the family has business ownership interests, a financial professional can help review the business assets and relative ownership interests of the spouses to determine who owns what. Especially in smaller family-owned businesses, things can be complicated and it takes some work to determine the property rights of each spouse in the divorce. A specific financial advisor used in divorce cases is called a Certified Divorce Financial Analyst.

A Certified Divorce Financial Analyst Can Help You Project Best Financial Outcomes

A Certified Divorce Financial Analyst (CDFA) helps divorce clients with the financial issues that will affect them for the rest of their lives. The work of a CDFA includes matters of separate versus marital property, valuing and dividing property, and retirement assets and pensions, to start. A CDFA becomes especially important in financial considerations before divorce when tax and financial issues affect the divorce, including issues regarding spousal and child support and dividing assets such as homes. An example of the issues addressed by a CDFA is whether the spouse needs liquid cash accounts to manage, or whether they would prefer receiving funds in qualified retirement accounts, as well as homes and assets not otherwise in cash form.

From the Institute for Divorce Financial Analysts: Why Hire a CDFA Professional

Knowing Your Financial Status Before Filing for Divorce

Gathering financial documents before filing for divorce is important, because the more you share with your family lawyer, the better they can help. Waiting until after the divorce is filed and served could cause an angry spouse to restrict access to information and change passwords on accounts. Anticipating an emotional reaction makes sense because divorce is a major life event and many spouses act out in ways they normally do not do with one another.

Make copies of all the known and available statements. If all the statement copies are not available, do not worry because the family lawyer can help you get them directly or through the discovery process in the divorce case. If you know the name of the financial institution and account numbers, that can make it easier to find the missing pieces later. Online account access makes it easy to collect your financial information and send it to your family lawyer to review when putting together your financial disclosures that are required in a divorce.

U.S. News & World Report: Financial Steps to Take Before, During and After Your Divorce

Finding Assets and Financial Considerations During the Divorce Process

After a new divorce lawsuit is filed, the parties often attend a Temporary Orders hearing so that the parties and the Court can determine who drives what, who lives where, and how the family will be financially supported during the divorce process. In preparing for a Temporary Orders hearing, and during the initial stages of the divorce, the family lawyer works with the client to obtain a full financial outlook of the parties and the marriage to determine the financial issues. Remember that it is most important that the family lawyers and the Court can create a complete picture of the finances of the family so that the financial rights and duties can be determined.

During the discovery process, the family lawyer has several legal tools and processes to obtain the necessary information to present to the client and the Court. Please understand that there are many situations where one spouse has more control over the information than the other. It is important to do the best one can to collect and present information and financial considerations before divorce.