Collaborative divorce is a form of alternative dispute resolution in which the spouses reach settlement without resorting to litigation. This process involves interest-based discussions as opposed the traditional position-based bargaining.
In addition to the spouses and their respective attorneys, the collaborative team often includes jointly retained third-party coaches as well as a financial professional.
The financial professional is often referred to as a “financial neutral” due to their impartiality to both parties in the process. The participation of a financial neutral offers several distinct advantages. Financial neutrals are not advocates for either party and they may not be engaged by either party in any subsequent litigation. This restriction promotes the free flow of information among all parties. There are no dueling experts in this process. The primary role of the financial neutral is to educate all participants in the collaborative process as to the financial implications of the divorce.
As part of the process, the financial neutral can also help couples articulate their financial interests. These interests often include saving for the children’s college education, buying a new home, saving for retirement, or simply having the sufficient cash flow to meet future expenses. The interests of the couple form the foundation for all future financial conversations.
Qualified financial neutrals should have significant training in the collaborative process as well as mediation training. Financial neutrals will hold various professional designations in their field and spend significant hours each year in continuing education. They may be Certified Public Accountants, Business Appraisers, Certified Fraud Examiners, Certified Divorce Financial Analysts or Financial Planners. Each offers a distinct skill set that should be matched to the complexities of the marital estate. Additionally, qualified financial neutrals must have strong listening skills and must be able to explain complicated and confusing financial concepts in layman’s terms.
Depending on the situation, the financial neutral can offer a wide range of services. Typically, the financial neutral will be the depository of all financial information. Having one professional gather and organize the financial information avoids duplication of efforts and ensures that both parties will receive copies of the identical financial documents throughout the process. Since transparency is critical to the collaborative process, the financial neutral can help identify missing financial documents and potentially overlooked assets and debts. Often, the financial neutral will meet with the spouses separately as well as jointly to gather as much financial information as possible.
In addition to gathering and organizing the pertinent financial information, they will often work with both spouses to create individual budgets and cash flow analyses for their lives post-divorce.
Using a financial neutral on the collaborative team will help the divorcing couple make informed financial decisions throughout the collaborative process.
The collaborative divorce form of alternative dispute resolution offers couples the opportunity to create a financial settlement that meets the interests of both spouses without resorting to traditional positional bargaining techniques. Financial neutrals can be valuable team members in the collaborative divorce process. Their role as non-biased financial educators will help divorcing couples make informed financial decisions when concluding their marriage and planning for the next phase of their lives.