August 18, 2014

Getting Unmarried; Money, Divorce, and Financial Neutrals Part II of II

175440139In Part I of Getting Unmarried, Money and Divorce, I talked about the two financial pillars of any divorce. The first being the balance sheet that lists every single asset and liability. The second being forward looking cash flow and support needs for children, if any, and both spouses.

In this post, I will briefly cover some other financial issues common in many divorces.  These include some discussion of marital and non-marital property, analyzing tax implications of various scenarios for child support and/or spousal maintenance; analyzing property and business interests, debt pay off scenarios, and comparing pros and cons of using one asset over another.

A financial neutral assists with identifying what is marital and what is non-marital property. Marital property of course is that property acquired during the marriage.  Generally, non-marital property is property owned prior to the marriage and brought into the marriage, inherited property, and or property received as a gift. Sometimes this can include a home where the down payment made with non-marital money, a retirement plan when the participant contributed to the plan prior to and during the marriage, or more simply a family heirloom passed down through the generations. Non- marital property generally remains with the receiver of the property and not considered in the allocation of marital property. When there is both marital and non-marital interest in an asset, a financial neutral can help determine the values of both the marital and non-marital interests.

The tax implications for child support and spousal maintenance are different. Child support is not taxable income to the payee and is not deductible by the payer. Spousal maintenance on the other hand is taxable income to the payee and is deductible by the payer in most situations. A qualified financial neutral is able to help a couple determine an optimal combination of child support and spousal maintenance in order to provide the greatest amount of after tax income to the family.

When a couple or one of the spouses owns a business, it is often helpful to determine the business value. If needed a specially trained neutral business valuation expert is engaged to provide this service. These trained experts employ a variety of valuation methodologies to provide an opinion as to the value of a particular business. Depending upon the complexities of the business the time and cost to complete a business valuation can vary.

Debts are another financial area where clients can benefit from the insight of a qualified financial neutral. Facilitating how to allocate debt between two spouses is an important function of the financial neutral. The neutral may suggest the clients consider a number of options available including the potential of reducing or paying off debt with other assets. This can help a couple breathe a little easier when freeing up needed cash flow for living expenses by not continuing to carry current levels of debt.

A well-trained neutral financial specialist helps divorcing clients see the big picture pros and cons of making a number of financial moves during settlement discussions. Clients are then able to make informed educated decisions concerning their financial future. The financial neutral is family centered in the collaborative process and makes every effort to assist divorcing clients reach agreements they both can live with. Only in the collaborative divorce process are clients able to achieve this level of client introspection and decision-making.

Collaborative divorce is not for everyone. Is a collaborative divorce process right for you or someone you know? Click on this link to learn more and decide for yourself.

Mike Miller

Mike Miller guides people through some of life’s toughest transitions including divorce (or as stated by an 8 year old, “getting unmarried”). Going through a painful divorce himself after a 32 year, marriage changed his life. Mike now helps couples make sense of the financial issues for them and their children. His approach is family centered and he emphasizes, “People always come before numbers.” Mike specializes in working with people in transition, helping them create and design the rest of their life so they can live it to the fullest.

He is a Certified Financial Planner™, professional and past president of the Financial Planning Association of Minnesota. Mike completed family mediation training at Hamline University School of Law Mediation Center and is a qualified neutral under Rule 114 of the Minnesota Rules of Practice. The Minnesota Statewide ADR-Rule 114 Neutrals Roster is published by the State Court Administrators Office. Visit his website at to learn more.

Registered Representative, Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Integra Shield Financial Group LLC and Cambridge are not affiliated. Neither Cambridge nor Integra Shield Financial Group offers legal advice. Individuals are advised to and should rely upon their professional legal advisors.

Integra Shield Financial Group
3181 Fernbrook Ln
Plymouth, MN 55447

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