The recent declines in financial markets and in the value of cryptocurrency have made divorce settlements more difficult to achieve as clients become more anxious. Recognizing your clients concerns and working with them so they understand the post-divorce effect of settlement proposals can help family law attorneys and their clients to settle the financial issues of their divorce. Attorneys have called on us recently with our experience as certified divorce financial analysts and certified financial planners to meet with their clients to address these concerns. Here are some tips that we have found helpful, organized under the mnemonic DEAF, (which we never want to be!) to help reach settlement:
- [D] Disappointment: Recognize and empathize with your client’s disappointment that the $1,000,000 virtual currency holdings may only be worth $300,000 today, or that their 401K is down by half a million. Attorneys that brush aside disappointment with a comment to not to worry because that both spouses are suffering, or that the market decline is temporary before empathizing does not help an anxious client.
- [E] Expense: There is always a risk that using an account that does not have a fixed value for an expense purpose, such as a down payment on a house or an equalizing payment to settle the community, becomes much more expensive as a percentage of value. This should be an option chosen as a last resort. Discussing a less expensive home with clients can help reduce the expense of liquidating investments in a down market
- [A] Alternatives: If a variable account that has decreased in value needs to be liquidated, consider alternatives that will minimize selling investments at a low value. Examples of alternatives that have helped clients are Separate and Equal Periodic Payment Plans for Retirement Accounts and Margin Loans for Investment Accounts.
- [F] Financial Knowledge: After empathy and discussion, information on the regular nature of market declines including bear markets, and projections of financial alternatives of the long- and short-term financial effects of settlement proposals can help your client put market declines in perspective and reach settlement.
Hoffman Divorce Strategies has been assisting family law attorneys and their clients since 1999 to prepare defensible financial reports for negotiation or litigation and understand the quality and long-term impact of settlement proposals. With our unique experience in accounting, financial planning, and divorce financial analysis we help attorneys manage and win more cases for their clients. See our website at https://hoffmandivorcestrategies.com/for-attorneys/ or call us at 985-674-1120 for more information.