Danielle Weston’s relationship with her husband was amicable enough when she filed for divorce last summer. And they’d certainly never fought about money."Originally, we wanted to just hire one attorney and not have two attorneys," she said. "So we just decided to hire attorneys for the technical part."
Hantz Financial Services already managed the Brighton couple’s finances, and the company offered divorce financial planning. Enter Fadi Baradihi, general sales manager and vice president at Hantz. A financial planner and consultant who works at Hantz offices in Midland and Southfield, he also is president of the Institute for Divorce Financial Analysts, which is a separate business and was created in 1993. The institute has trained 3,500 to 4,000 CPAs and financial planners in financial planning for those in the divorce process.
"We teach them, we test them, keep track of their continuing education, support them on case work," he said. Baradihi helps clients answer questions such as "Are their enough liquid assets (money that can be turned into cash) to pay the bills?" What will the couple’s net worth look like in the future, and how will any future income be divided? When will one spouse run out of money and need financial help from the other?
A divorce planner such as Baradihi will testify as an expert in court if needed. Nationally, the average retainer for a divorce financial planner is $1,500, with an average hourly fee of $150 to $200.
In short, the idea is to "go back and forth" until the couple reaches a resolution, he said. "The one point that surprises me the most is how helpless people feel when it comes to a divorce," he said. Having a financial planner work alongside the attorneys helps the client feel more comfortable with the whole process so he/she can "anticipate how things will work out, rather than the stress of saying ‘How am I going to pay my bills?" he said. He cited one example in which a divorcing couple needed to divide the present and future assets of their business. One spouse turned in a value of $8 million, the other said it was $12 million. The parties "sat there and looked at each other for six months wondering what to do with that," he said. Baradihi convinced the two to hire a third party to determine the value, which came out closer to $8 million than to $12 million.
Judge Dorene Allen of Midland County’s Probate and Family Court said including a financial planner in divorce work helps couples make their way through sticky issues "that they don’t always want to come to grips with right away." "I think anytime you can get accurate information, it is a good thing," she said. Allen agrees with Baradihi that attorneys must be part of the process. Baradihi won’t take a client who hasn’t hired a divorce attorney. The presence of a financial planner doesn’t necessarily shorten the divorce process because, for one thing, there’s a mandatory 60-day waiting period before a divorce becomes final, a six-month waiting period if children are involved, Allen said.
Baradihi has advice for helping divorcing couples handle finances."Don’t marry your assets," he said. "Don’t be too strict with what you want or don’t want." It’s not worth a couple’s insolvency for the wife to say, "I’m staying in the house come hell or high water," then end up having to sell the house two years later because she can’t afford to live in it.
Prepare in advance for the settlement by knowing what assets are on the line. Many people are surprised when they find out what they actually have, Baradihi said. Assets acquired after the marriage, or appreciation of assets brought into the marriage, are fair game. "You have to present the argument that you’re not being greedy but want to do OK," he said.
The general guideline for alimony is that the person receiving it should be able to maintain a lifestyle comparable to what he/she had during the marriage, he said.
Don’t be blind to tax codes. If a couple has a $100,000 checking account and a $100,000 IRA, the two don’t have the same value, Baradihi said. The IRA will be taxable when it’s distributed, while the money in the checking account – except for interest – already has been taxed. So the person who ends up with the IRA might get $75,000, not $100,000. Decide what you absolutely must have. Don’t marry the pension. "Many times you can’t buy your spouse out of their share of the pension," Baradihi said.
SOURCE: Midland Daily News