According to Barbara Shapiro, CFP, CDFA, CFS, one of a handful of certified divorce financial analysts in Massachusetts and vice president of HMS Financial Group in Dedham, “Strive for a divorce settlement that is not only equal, but financially equitable.”
Of course, stability and routine are the mantra when it comes to helping children handle the fact that their family as a unit will no longer be the same, however relocating the family may have as many pros as cons. Specifics differ greatly from one family to the next, but the financial stress of funding two households with the same income can be reason enough to force the sale of the family home. Rather than guess the financial impact of such a decision, it is best to seek professional assistance. Certified divorce financial analysts specialize in forecasting the long-term effects of the settlement so both partners have a clearer view of their financial futures. The Web site for the Institute for Certified Divorce Financial Analysts is www.institutedfa.com. It has a listing by state of professionals in the field.
Shapiro shares these answers to common questions regarding divorce:
Q: Is keeping the homestead the best decision?
A: Although women frequently want full ownership of the home because they are often the custodial parent, this may lead to severe financial problems. According to the U.S. Bureau of Labor Statistics, families in the northeast spend 35 percent of their gross annual income on housing. From mortgage payments and taxes to utilities and upkeep, the homeowner bears a heavy burden that can be unfairly and unconsciously displaced on children. Couples can sell or consider maintaining joint ownership of the home. Keeping the house in both names will allow for both parties to continue to benefit from a tax perspective until it is sold. A financial expert can help parents explore the available options.
Q: How can I be sure my settlement takes into account my child’s future education and extra-curricular activities?
A: A 529 plan allows both parents to save for their children’s education while limiting their access to the money for anything but educational expenses. The settlement should also take into consideration the costs of raising a child including babysitters, piano lessons, day camp and other activities. Deciding on living arrangements, visitation and creating a budget that realistically supports two homes as well as the costs of raising and educating children can be a difficult task. This is where a certified divorce financial analyst proves to be of great value.
Q: What should I do now if I am considering divorce in the future?
A: Often the financial realities of divorce do not hit home until the break up happens. Many families operate without a household budget and don’t have a clear idea of their family finances. Playing catch-up on your financial situation during divorce proceedings or upon the sudden death of a spouse or partner is not the best idea, but this is frequently what happens. Spend some time acquainting yourself with your family’s finances; make note of account numbers, balances and beneficiaries on accounts.
Q: If I am not sure my settlement is financially fair, what should I do?
A: Seek financial advice from an expert to analyze your settlement. Provisions in settlements can be complicated, and only by analyzing them for the long-term can they produce financial benefits for both parties as well as the welfare of the children. A growing number of area attorneys recommend that the divorcing individual verify assumptions with a certified divorce financial analyst to ensure that nothing has been overlooked, and seek advice on devising an investment strategy that will work best going forward.
Q: My divorce has caused communication problems with my children. What should I do?
A: In divorce there are so many considerations, both financial and emotional, that frequently children bear the brunt of the break-up unless parents make a conscious effort to position the changes in their lives in a positive manner. Professionals agree that many parents naturally get caught up in feelings of mistrust and frustration but these feelings need to be kept separate from communications with the children. While this is not my area of expertise, I frequently recommend that my clients seek family counseling to open the lines of communication between family members.
Dr. Robin Deutsch, co-director of the Children and the Law Program at Massachusetts General Hospital offers these four general tips when helping children deal with divorce:
- Parents need to keep their sense of betrayal or any negative emotions they might be experiencing separate from the children.
- Do not vilify the other parent because children are the product of both parents and they may hate or reject the part of themselves that they identify with the “bad” parent.
- Divorcing parents can become very distracted and self-involved. Parents need to remember that their children may need as much or even more support and nurturing at this time as they.
- Unequivocal research findings show conflict between parents directly relates to the child’s adjustment to the divorce. Parents need to manage conflicts amicably and children should not be used as a go-between or bargaining tool.