Divorce and your friendly Financial Planner
As part of the necessary steps to finalise a binding financial settlement, divorcing couples have to disclose their financial status to each other in a frank and complete manner.
This will involve detailing their assets, what they are and how much they are worth, as well as their liabilities; what they are and what is owed.
Sounds simple enough.
Practically when one household suddenly splits two are generally created. This can mean that often the same income has to fund both households – especially if there are children involved as the financial needs of the children have to be supported.
This could result in two mortgages or even a sale of the family home if both incomes were necessary to support borrowings and this can no longer be continued.
A Financial Planner can work with a couple to determine their likely budgetary requirements and can use cashflow models to look at how assets and income could be split between the couple to the best effect and over what period of time.
For example, looking at the dependency years of their children and how the higher income needs could be met over a discrete period of time etc. Undergoing this exercise can bring massive value to the mediation process.
Where assets are abundant the outcome might be very obvious and assets can easily be transferred between the parties without detrimental lifestyle effect on either.
In many cases however, finances these days are complex and the Financial Planner can work through the issues looking at how the budgetary requirements could be met by a fair and effective separation of assets or even a compromise.