The Importance of the Financial Advisor in the Collaborative Divorce Process

The financial advisor is an important element to a successful Collaborative Divorce  process. Collaborative Divorce is a process that divorcing or separating spouses use to resolve issues resulting from the breakdown of their relationship. The goal in Collaborative Divorce is to resolve these issues in a non adversarial manner. The aim is to minimize or eliminate negative economic, social, and emotional consequences of litigation on those involved and their families.

How Does the Collaborative Divorce Process Work?

Each party will retain the services of a Collaborative Divorce lawyer. The parties will meet with their respective lawyers and typically begin with providing financial and other information to their lawyers. The Collaborative Divorce lawyer will provide legal advice and explain the collaborative process and answer any questions their client may have. When all parties are ready a four way meeting is scheduled between the lawyers and clients. The four way meeting will first begin with the signing of an agreement entitled the Participation Agreement. This agreement will be signed by all parties including the lawyers. The Participation Agreement will describe that the separating parties will try to resolve the outstanding issues between them in a fair, equitable and transparent manner without resorting to court. The Participation Agreement will also have a provision that the respective collaborative lawyers will not be able to act for their clients should the issues need to be resolved in a contested court application. This will ensure that both the lawyers and separating parties are invested in the Collaborative Divorce process.

After the signing of the Participation Agreement, then usually an exchange of information is provided as well as a discussion on further documentation required as part of the Collaborative Divorce process. A discussion of retaining experts may be necessary such as divorce coaches, financial advisors, child specialists etc. and negotiations will commence.

The Role of the Financial Advisor in the Collaborative Divorce Process

The financial advisor is crucial to the success of the Collaborative Divorce process. The financial advisor is a neutral third party that assists the process by gathering financial documentation in order to prepare a financial assessment of the parties’ financial situation. This would include an analysis of assets, liabilities, income and expenses. This information is to be relied upon by the parties and their respective lawyers to base negotiations on. It is more effective in negotiations when the financial analysis is coming from a neutral third party than from the other party or their lawyer.

The financial advisor can also assist in the consideration of the long term financial consequences to both parties of any set of assumptions made about assets, debt division and spousal support. It will become apparent if the proposed settlement is not financially viable, or that a settlement offer may cause substantial inequity or hardship to a party.

The financial advisor can make a lawyer’s life a lot easier by removing the financial aspects from the work of the lawyer. A financial advisor, through their analysis, can be of assistance, for example, convincing clients whether or not it is financially viable to remain in the family home. The financial advisor can run different assumptions and options and can evaluate them, leading to creative problem solving. The financial advisor can also assist by educating the parties and giving them a realistic view on their financial situation. It is easier to hear about financial reality from a neutral financial advisor than from the other party.

The Collaborative Law process seeks to deal with the issues resulting from the breakdown of a relationship in a fair, transparent and non adversarial way. In order to accomplish this effectively the role of the financial advisor is an important element to its success. Should you have any questions on the Collaborative Divorce process please feel free to give us a call at 604-449-7779.

Please like & share: