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The Role of a Financial Neutral in Collaborative Law

In this video, Nancy and Monica discuss the role of a financial expert during Collaborative Divorce.


NANCY HETRICK: Hi, I’m Nancy Hetrick. I’m the CEO and founder of Smarter Divorce Solutions, and I am in the collaborative divorce space as a financial neutral.

MONICA DONALDSON STEWART: Hi, my name is Monica Donaldson Stewart and I am a practicing family law attorney at Donaldson Stewart, PC in Chandler, Arizona.
Nancy, one of my favorite aspects of collaborative divorce is the team-centered approach. And one of the team members that I consider to be crucial is the financial neutral.

NANCY HETRICK: Right.

MONICA DONALDSON STEWART: Can you explain a little bit about what your role is as a financial neutral?

NANCY HETRICK: Absolutely. And I agree with you, that I think for most couples it’s a critical piece, right? Because for most divorces, as much as 90% of what you’re dealing with is financial, so to do that without a financial expert seems to be very shortsighted for a lot of folks.
So typically, the collaborative attorneys will figure out at the very beginning of the case that there’s enough financial complexity that it makes sense to bring in a financial expert to look at things like tax efficiencies, like creative settlement ideas that might make it so that the couple can be more likely to achieve the goals that they’re trying to accomplish in the next phases of their life.
So I typically will meet with the couple together or individually sometimes as well, get from them what is it they’re trying to accomplish in the next phases of their life, and get an idea of what are their biggest concerns around their finances, and then really come to the table with the whole team with some proposals and scenarios on some different settlement ideas and how that’s going to roll out for the couple over the next 10 years, 20 years, even 30 years.
One of the most critical things that I think we do by being brought into a case is making sure we’re looking at not only is your settlement going to work for you today, but how’s it going to work out for you 10 years down the road, 20 years down the road? Does it really make as much sense as you think it does when you’re just looking at what has to be done right at the time of divorce?

MONICA DONALDSON STEWART: So Nancy, what is it that you would look for in a couple that you would consider appropriate for us as attorneys to offer to bring in a financial neutral onto the team?

NANCY HETRICK: That’s a really good question, Monica, because there are definitely some very specific markers that you want to be conscious of. Number one is going to be real estate beyond the primary home. If there’s any rental properties, any vacation properties, there tends to be some real opportunity for tax planning and creative things to do with those that need to be considered.
Second thing would be retirement plans. Pretty much anytime you have retirement plans, there’s going to be some planning around those that has to happen.
But the number-one thing is pensions. If anyone has a pension, you’ve got to bring in a financial expert because every single one is different. They all have different things you can and can’t do in divorce, and so it’s critical that they get valued properly and that we all know what the options are on those pensions that may be eligible for division or it may not be, and we really need to know all the ramifications of that.
Certainly, small business owners – anytime there’s a small business involved, we can really come in and help potentially avoid the cost of a full business valuation but give you the analysis on a small business to make sure that everybody’s got the information necessary to make all the choices that need to be made in a very educated way. And that’s all within our goal, is to make sure that for both parties, whatever decisions they’re going to make in their financial settlement are made fully educated and fully aware of what the consequences of those decisions will look like.

MONICA DONALDSON STEWART: One of the areas where I find it’s also very helpful to have a financial neutral is the issue of spouse maintenance. It tends to be a very hot-button issue regardless of which spouse you’re representing.

NANCY HETRICK: Right.

MONICA DONALDSON STEWART: So can you explain a little bit about the value that your collection of information and scenarios offer when helping people decide how they’re going to reallocate income in a divorce?

NANCY HETRICK: Right, absolutely. And that’s so important. And surprisingly, what I find: So many couples in divorce that are choosing the traditional litigation route, literally attorneys will say, “Well, what do you think you need and for how long?” And often that’s just an overwhelming question that, “I don’t even have any idea,” right?
So one of the things we do is really do some analysis of projected expenses once this is all said and done and really help the couple find that sweet spot of what one party can afford versus what one party needs, and really take all the subjectiveness off the table.
What I have really found is maintenance is a hot button because there’s so much confusion and there’s so many unanswered questions. And when we can get it all down in black and white, the agreements just come really, really easily.

MONICA DONALDSON STEWART: I would agree.

NANCY HETRICK: So the team approach just really can be significantly faster and more effective.

MONICA DONALDSON STEWART: Thank you.