More Red Zones
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 action is based and the thoroughness of the preparation. In Red Zones in Divorce (New York): What You Need to Know, we discussed the Preliminary Conference Red Zone. In this article, we discuss other red zones in the divorce process.
In some cases, one of the parties may need to make application for temporary (pendente lite) support or legal or expert fees. Although the attorney will usually not have a complete understanding of the relevant financial parameters at this time, she may still need to prepare for arguments associated with them.
Requests for temporary support and fees are effectively red zones within a red zone. The more information that has been gathered, the better the preparation.
Unanticipated Red Zones
Since unanticipated red zones can also arise, a general rule of thumb should be to do as much upfront preparation as possible. The client should be extensively interviewed, all available financial information collected and preparation of the Statement of Net Worth actively initiated. Although more formal discovery requests will probably be made later in the process, the client should provide the attorney with as complete a set of financial documents as possible, and these documents should be carefully reviewed. It is important also to learn the client’s wishes and expectations for the eventual outcome of the case, even if seemingly unrealistic or subject to change. Spending time with the client at this time will also be a first opportunity to evaluate how the client might act if required to testify in court, i.e. whether the client will “make a good witness.”
With a broad background in personal finance, a skilled and experienced divorce financial planner can be a valuable asset in this initial information collection process. In addition, the divorce financial advisor will likely have access to software that can be easily updated as information becomes available. The financial divorce planner can also do a historical analysis of recent tax returns,, as these are often great sources of insightful financial information.
It is often also useful to have the client begin developing a bookkeeping record of past and current cash flow. This exercise helps make the client better attuned to the underlying financial details of the pre-divorce marital lifestyle. This understanding can potentially result in better decision-making during settlement negotiations. In addition, insights derived from preparing this record can potentially help the client develop a realistic post-divorce budget once the divorce has been finalized.
The Preliminary Conference marks the end of this stage and sets the agenda for the remainder of the process. The Statement of Net Worth, which will be exchanged prior to or at the Preliminary Conference will probably be based upon an incomplete set of facts and may therefore contain some inaccuracies. To minimize errors and omissions, it still needs to be carefully prepared, studied and analyzed.
If the above course of action is followed, the attorney should be able to enter the Preliminary Conference with a good understanding of potential discovery needs. The attorney should also be prepared to narrow the focus of the divorce to those issues that will require further analysis and consideration. Once the parties have reached agreement on specific issues at the Preliminary Conference, these issues will be difficult to revisit. The Preliminary Conference will also be an opportunity to introduce the client and the client’s perspective on the case to the court. This is very important, as first impressions can have a lasting impact on how the case will be perceived and litigated.
Discovery Red Zone
The Preliminary Conference marks the beginning of the Discovery Red Zone. A great deal of information will have been collected in preparation for the Preliminary Conference. The attorney should now have a good perspective on what additional information might be helpful and how best to acquire it. Typically, the parties will have agreed to exchange certain records within 45 days of the Preliminary Conference Order. These documents will often cover a period of three years, but the information collected prior to or at the Preliminary Conference may have suggested alternative time periods that would potentially work better. The Preliminary Conference Order will probably also state, “If a party does not have complete records for the time period, the party shall provide a written authorization to obtain such records directly from the source within five days of presentation.” To expedite the discovery process, this directive should be closely followed.
Although there will be other opportunities to collect information in the Discovery Red Zone, it is important to carefully analyze all information as it is being collected. This will lead to a better understanding of the underlying parameters and provide further direction to the discovery process. The amount of time available for discovery is limited, so this process should involve a period of intense activity. The more thorough the process, the better the attorney will be prepared to litigate the case. This will potentially also speed up the window of opportunity for settlement negotiations.
The opposing attorney will likely have the spouse’s Statement of Net Worth by the time of the Preliminary Conference. This also needs to be studied carefully, not just to identify inconsistencies with other information but to further develop a list of discovery needs. As the discovery process proceeds, additional needs will become apparent, and requests for additional discovery should continue. Software is available to continuously update the client’s Statement of Net Worth and regular updating should be done. This will help make current information more readily available. We also recommend that the attorney continuously compile, organize and catalogue information as it is collected, preferably electronically and in a searchable format. This should give the attorney quick and easy access to these documents.
It is likely a Notice for Discovery and Inspection will need to be served. The attorney may want to consider developing a specific list for this purpose instead of using a more generic and broader form. We believe it is more likely specific information will be provided when fewer, more specific requests are made. It will also be easier and less time-consuming to find the information one is seeking if it is not buried in a sea of largely irrelevant paperwork. The divorce financial planner, who should by now be very familiar with many of the financial parameters of the case, can be very helpful in putting together such a list. The planner can potentially also be helpful in determining the need for specific outside experts, analyzing Interrogatories, helping prepare for and analyze depositions or identifying information deficiencies that might require more aggressive discovery approaches.
The end of the Discovery Red Zone is marked by the filing of a Note of Issue and Certificate of Readiness for trial. Once discovery has been certified, this aspect of the divorce process will be difficult to reopen. It is therefore incumbent upon the attorney to make sure as much useful information as possible has been compiled. The reality is that discovery will never be totally complete. Nevertheless, the earlier this process is started and the more effort invested in it, the more useful it is likely to be.
Pre-Trial Conference Red Zone
Between the initiation of the discovery process and the Pre-Trial Conference, especially if the work has been done rigorously, efficiently and in a timely fashion, there should be ample opportunity to attempt to negotiate a settlement. Because of the cost of going to court and the vagaries of the court system, it is very important to try to settle the case. To assist the process, the divorce financial advisor can analyze the workability of alternative settlement scenarios, including the effect of taxes. The divorce financial analyst can also provide analytical input at strategic or settlement conferences.
If settlement discussions are unsuccessful, one or more pre-trial conferences will need to be held. If the above courses of action have been taken, the attorney should be well-prepared for a Pre-Trial Conference. If settlement discussions are unsuccessful, a trial date will be set. This marks the end of the Pre-Trial Conference Red Zone.
Trial Red Zone
Preparing for trial can be a time-consuming and expensive process. Unless the estate is large, the cost of preparing for and going to trial can further deplete the marital estate. It can thus have serious effects on post-divorce finances. Even if the case is eventually settled, the costs associated with preparing for trial will need to be paid. Settlement discussions will therefore generally continue until the last possible moment. If necessary, a well-organized and intimately involved certified divorce financial plannercan speed up preparation for trial. If necessary, the planner can also testify at trial. If possible, settlement discussions should also continue during trial.
Added Value of the Certified Financial Divorce Planner
We have discussed several opportunities in this article for the financial divorce planner to bring added value to the process. A skilled certified divorce financial planner is an expert with training and experience in all areas of personal finance and money management, including tax planning, retirement planning, present- and future-value calculations, employee compensation and benefits, economic forecasting, estate planning and risk management. This broad perspective gives the planner a unique ability to analyze assets and liabilities and income and expenses as they integrate and interact with one another in both short- and long-term divorce contexts. Because of this, cases involving certified divorce financial planners are often settled or resolved more quickly, with better results and at less cost, than those using more traditional methods. Divorce financial planning is a fee-only process that does not involve investment, legal advice, or securities or insurance transactions.
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.