Red Zones in Divorce (New York): What You Need to Know

Red zones in the divorce process are key coordination points between the divorce financial planner and attorney.  This article focuses on the Preliminary Conference Red Zone, a pivotal early stage which can have a profound impact on how a case evolves.

People considering hiring a divorce financial planner or Certified Divorce Financial Analyst® (CDFA®) often ask when is the best time to bring us into the divorce planning process. Our answer is “the sooner the better,” especially in cases that could involve complex or contentious issues, a power or knowledge imbalance, a lack of trust or an inability to work cooperatively. Experience has taught us that the earlier the underlying financial data is carefully and thoroughly collected and analyzed, the more likely workable divorce and finance outcomes will evolve. The importance of putting a case into a conceptual and structured financial framework in which the various parties can quickly and easily engage cannot be overestimated.

Although this article focuses on key stages in divorce litigation, it is also applicable to mediation and collaborative divorce. Irrespective of process, a financially workable outcome is more likely when a thorough understanding of the marital assets, income and expenses precedes (but does not unnecessarily delay) negotiations and their accompanying and often irreversible outcomes.

The ‘Red Zone’ Concept

To help clients conceptualize and better understand the importance and expectations associated with divorce finance during the various stages of the divorce process, we have begun to refer to these stages as “red zones.” This construct is easily communicated to the client, and each red zone becomes a clear and specific call to action. The client quickly understands the significance of these critical financial divorce junctures and often becomes more engaged in the issues associated with them. And viewing the divorce process in this way is also helpful to the attorney who — because of pressures associated with managing a large caseload — may tend to avoid working on a case until there is a sense of urgency associated with it. Among other things, this method of working is likely to increase the level of stress inherent in an already stressful job.

In football, the Red Zone is the section of the football field between the 20-yard line and the end zone. The close proximity of the teams to the end zone, the smaller the territory in which they are able to operate and the limited number of downs available to them to either score or prevent a touchdown require changes in play for which they must be thoroughly and adequately prepared. This area of the field has been termed the Red Zone because it is a critical place on the field in which games can be won or lost.

The better prepared a team is for Red Zone play, the more prepared it will likely be to implement successful strategies or adapt to unanticipated events. After a score, a hold or a turnover, the game continues, but it is nevertheless permanently affected by the outcome of the events that had just taken place. As in divorce, replays are not allowed and less time is left on the game clock once Red Zone play has run its course. Because of this, Red Zone play can have lasting psychological and strategic impacts on both teams that can often affect the remainder of play.

Timing Is Key

Divorce is an emotional process that will usually have significant financial consequences. Because of this, divorcing parties frequently walk a fine line between attempting to achieve viable financial outcomes and facing emotionally charged and troublesome financial futures. Although the divorce process will very often have unanticipated twists and turns, it will work best when structured in an orderly fashion. Bypassing specific stages, avoiding dealing directly with important issues, giving some stages inadequate attention or attempting to deal with them out of order or context can sometimes be problematic. As a result, this can often lead to financially unworkable or unanticipated consequences that are sometimes difficult, impossible or expensive to fix. Workable outcomes for issues involving children are often also more difficult to achieve in the context of financially problematic scenarios or in cases that are unduly prolonged.

To assist the process and keep it on track, judicial intervention is often necessary, and the courts have developed a timeline of stages, each with well-defined components and deadlines. Whether or not the court becomes directly involved, clients need to clearly understand and actively engage in each of its various stages. This will increase the likelihood of success. How each stage is managed and executed can greatly influence the outcome of a case.

Our experience has taught us that the divorce process should not be rushed through or unduly delayed. If too fast, the process can be amicable, yet give rise to poorly conceived and unworkable consequences. If too slow, it can become unnecessarily contentious, expensive and difficult to resolve. Furthermore, without the belief that progress is being made, the parties can easily become frustrated, discouraged, uncooperative, angry, impatient or fearful that the marital estate is being dissipated. In addition, the more drawn out the process, the more likely it is that unforeseen events will independently cause a potential settlement to derail.

Clear analogies exist between the Red Zone in football and red zones in divorce. As in football, successful navigation of the divorce process is often dependent upon the quality and extent of the knowledge upon which the divorce is based, the anticipation and thoroughness of the preparation, the ability to adapt to change and the nature of the execution within these stages.

In cases involving divorce financial planning, red zones are also legal and financial coordination points between the attorney and the divorce financial planner — the latter bringing a broad financial perspective to the case that compliments the attorney’s legal perspective. Having a second set of eyes actively engaged in the process can potentially also lead to insights that might otherwise be overlooked. To extend the football analogy further, in a well-functioning attorney/divorce financial planner team, the attorney typically assumes the role of head coach and the divorce financial advisor the role of “assistant financial coach” or “financial coordinator.”

The Preliminary Conference Red Zone

Even if there is no sense of urgency and no immediate pressure being brought to bear, the moment a client signs an engagement letter a red zone is entered. For example, work should begin immediately on the preparation of a Statement of Net Worth.  In our opinion, what happens at this juncture could have a profound impact on how the case evolves. If there does not appear to be an immediate need for judicial intervention and it’s imposed deadlines, the tendency might be to give the case low short-term priority and focus attention instead on unrelated and seemingly more urgent matters. The Preliminary Conference Red Zone, however, is an extremely critical phase of the process. If a case during this phase is not given the attention it deserves, its deferred sense of urgency can become increasingly critical as the process proceeds. This cycle of deferral and urgency can and should be broken, and a skilled divorce financial analyst can be a valuable asset in helping keep a case on track.

Although the early stages of the divorce process appear to represent an opportunity to quickly and inexpensively settle a case, attempting to do so this early in the process does not come without risk. It is advisable that, prior to initiating discussions with the opposing side, a preliminary assessment of the various parameters be made. The attorney needs to be comfortable enough with this assessment to make an initial decision about how best to proceed. Aside from having limited and sometimes erroneous information about the parties — the stories the parties tell about their marriages are sometimes so different you would think they were talking about different marriages; also, the client is often so intent on earning the attorney’s strong advocacy, there may be a tendency to stretch the truth — the attorney’s initial knowledge of divorce finances will often also be limited.

If a divorce financial planner is involved in a case at this early stage of the process, the planner can be a good resource or financial sounding board to help the attorney make this determination.

Unless it is clear that the case will be easy to settle or that financial resources are limited, we recommend, irrespective of whether judicial intervention is formally requested, that preparation for a Preliminary Conference begin in earnest. Doing this will front-load some of the work that will typically be done later in the process, so it will increase short-term costs. But this work will likely need to be done anyway, and this will help get the case off to a running start. It will also facilitate work associated with red zones that normally occur later, as well as overall preparedness for unanticipated red zones that may suddenly arise.

Considering Hiring a Divorce Financial Planner to Bring Professional Financial Expertise to Your Case?

A broadly educated, trained and experienced divorce financial planner can bring significant added value to your case.  Make smart financial decisions in divorce.   Contact us for a free initial consultation.

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