CFP®, CDFA® | Divorce Financial Planner and Mediator
Regardless of the situation, one fact is clear: divorce is complicated and messy. Add in the emotional aspect, and the process can get even messier.
Simplify My Divorce exists to help you shoulder that burden. It functions to inform, educate and provide strategies to navigate divorce with confidence by providing free resources and low-cost, do-it-yourself planning options at a fraction of the price of hourly professional fees.
In the US, the steps to getting a divorce are basically the same for everyone; but the path toward reaching a finalized divorce can be different. There are three essential stages of the process that everyone must navigate before their divorce is final:
- Make the decision to get divorced.
- Negotiate and come to agreements about finances, kids, house, etc. (we call this the “Messy Middle”)
- Put agreements in the official divorce documents and file with the court (finalized).
The path to finalizing your divorce comes down to the process you choose. There are a variety of options such as litigation (court), do it yourself (DIY, kitchen table), mediation and collaborative divorce. Choosing the right one for you is critical. Simplify provides education to help get this decision right.
Despite the differences, what do all of these processes have in common? It’s simple: there’s a point in the middle of a divorce where decisions must be made around your finances. You must decide on who gets what, and how to divide one household into two.
The decisions made during this Messy Middle stage ultimately go into the final divorce documents that everyone signs off on. This is when the divorce becomes final—people are able to go their separate ways and begin their new lives.
But the Messy Middle is messy for a reason. After all, you are dividing your livelihoods. This is where you want to ensure you have a solid foundation, fully understanding the ins and outs of splitting financial assets and liabilities. Very expensive mistakes can be (and are often made) at this point in the divorce process.
Empowered with proper education and information, you can make decisions and negotiate with confidence at this critical phase of the divorce process.
That’s where Simplify comes in. We are here to help, providing expert educational divorce programs and decision-making tools. Backed by Certified Financial Planners (CFP®) and Certified Divorce Financial Analysts (CDFA®) that have helped thousands of people navigate the financial ins and outs of divorce, Simplify brings professional knowledge to the forefront at a fraction of the cost of high hourly fees.
At Simplify, we believe that divorce is hard enough. Individuals going through a divorce could save a tremendous amount of time, money and energy—and reach a finalized divorce quicker—by being prepared for the Messy Middle.
Understanding the 3 Steps in a Divorce
The divorce process can be simplified into 3 high-level steps. These include the beginning, the (messy) middle, and the end. Most people understand the beginning and the end; but the middle is where you want to focus.
Step 1: The Decision
The first step lies in the decision to move forward with a divorce. While this seems obvious, it’s truly a big mindset shift moving from thoughts to action. This is where countless people make mistakes—all because they don’t understand their options or what the divorce process looks like. The gravity of this decision can be emotionally intense. Most people naturally go to a place of fear, which causes them to make bad decisions from the start.
After helping thousands of individuals navigate their divorce, I’ve learned that my main job is to simply help people make decisions from a place of education. With more information, that fear stops controlling you and allows you to make confident, informed decisions.
Of course, embarking on that journey is easier said than done. But ultimately, I can’t stress enough how important it is to educate yourself before making any decisions.
Depending on your situation, you are likely considering two options: either doing the divorce on your own, or with the help of attorneys.
This is where you need to pause.
Now is the time to educate yourself—not immediately make decisions. A little education at the beginning will save you time, money and energy in the long run.
Step 2: The Messy Middle
The middle of a divorce is particularly messy. Why? Because that is where all the hard stuff happens. You and your spouse are making major decisions during the most difficult time in your life; what’s more, divorce can also be very expensive.
There are 3 main decisions you will need to make:
- Your property division (assets & liabilities).
- Your cash flow (income & expenses).
- The process and professionals you may or may not hire.
Let’s start with property division, a factor that impacts everyone going through a divorce.
Property Division
This involves making decisions around dividing your assets and liabilities. “Property” can be broken down into 2 categories: the smaller stuff and the larger stuff.
Personal Property Division (The Smaller Stuff)
Think of personal property as all of the lower-value items in your house. This includes things like kitchenware, furniture, beds, TVs, etc.
Division of personal property is often the easiest part for most people. However, it can also be quite difficult, as emotions are entangled in the items that fill your shared home.
Here are some common questions that come up during personal property division:
- Where and how do we start?
- Are there common ways people usually divide their stuff?
- Do we have to value everything?
- What if one person keeps the majority of our stuff? How does the other person set up their new living situation?
Whether you hire attorneys or other professionals to help you work through your divorce, you are usually left to answer these questions yourself. It’s not worth paying attorneys $250-350/hour ($500-700/hour combined) to help sort out the little things.
At Simplify, we distill the common ways people handle their personal property division and provide tools to help make it easier. You should only pay professionals to help once you’ve done the heavy lifting yourself—that is, if you pay them at all.
Property Division (The Larger Stuff)
Next, let’s talk about dividing the higher-value things in your possession. This is where people need the most help because it’s complicated.
High-value property division involves the following:
- House and other real estate
- Cash accounts
- Credit cards
- Cash value life insurance
- Investment accounts
- Retirement accounts
- Business interests
- Personal use assets or larger personal property, such as cars
When going through a larger property division, you need to first answer a few questions.
What date should we use to value our assets and liabilities?
In a divorce, you must come to an agreement on the valuation date. From retirement accounts to bank accounts, the account balances are changing daily. That is why it’s important to really think this through. What happens if retirement accounts increase or decrease substantially during your divorce process? This is a common pitfall for people completing their divorce on their own without any guidance.
How do we value our assets?
This question usually comes up when trying to value a house, business, or vehicle. Unlike accounts that have a daily account balance, these assets usually have to be valued by online resources or professionals. For example, let’s say that one person in the divorce wants to keep the house. In this case, you need to agree on a value. The problem with a house is that you will only truly know the market value if you sell it. This is where utilizing realtors and/or appraisers is usually needed. However, realtors and appraisers come with their own set of problems—namely, this will come at a cost. They are also only providing their best educated guess given recent sales of similar houses in your area. For this reason, valuing assets typically involves reaching a “good enough” agreement that you can both live with. The key is making sure you have enough data to make an educated decision.
How do we change the title of our assets?
This depends on the asset or liability. Changing the title of a house, mortgage, or retirement account is obviously more difficult than changing names on bank accounts. This is another area people make mistakes. Oftentimes, they either don’t do it correctly or don’t do it at all—both of which can have huge long-term ramifications.
Are we going to run into tax issues by dividing our assets?
Possibly; but most tax issues can be avoided if you’re strategic and do it correctly. The most common tax issues arise from retirement and investment account divisions that aren’t done properly.
These are just a few common questions that are important to get right. At Simplify My Divorce, we can arm you with the proper education and knowledge to ensure that you aren’t making big, avoidable mistakes.
Cash Flow (Money In, Money Out)
Cash flow decisions don’t always fit into everyone’s situation; but when they do fit, they can be the most difficult to figure out. The 3 cash flow decisions that you could be facing are:
- Plan for handling minor (or college-age) children’s expenses.
- Child support.
- Spousal maintenance/spousal support/alimony.
Of these three topics, spousal maintenance is the most difficult issue to deal with and is state specific. If spousal maintenance is something that you will be facing as part of your divorce, we encourage you to talk to an attorney. Using the tools and education provided at Simplify My Divorce is still tremendously helpful, but the ins and outs of spousal maintenance are beyond the scope of these resources.
Attorneys and Divorce Processes
Now, you have a better idea of what you need to figure out as part of your divorce. The next question is: how do you come to agreements? What process might work best to get you from here to there?
Here are common questions that you might be asking yourself:
- Do you and your spouse need to hire an attorney?
- Are you going to go through the court system, or are you going to try and resolve things out of court?
- If you want to try and stay out of court, how do you do that? Do you try to do everything on your own? Or do you use professionals (i.e., attorneys, financial advisors, mediators, etc.) for specific things?
- Who will draft your final agreements once you get there? Will you do it yourself, or will you hire an attorney to do it for you?
As someone who has helped over one thousand individuals navigate their divorce, I’m always surprised that most people don’t know that there are different paths through the situation. Once you understand your options, you can then make an informed decision that works best for you and your situation.
Your Divorce Process Options
Did you know that there is more than one way to go through your divorce process? There are actually 4 main divorce process options. They are as follows:
- Do it Yourself (DIY)
- Mediation
- Collaborative Process
- Litigation
Each option has pros and cons, and one may be a better fit over another given your situation. Most of my experience lies in the mediation and collaborative processes; but I also help folks trying to do as much on their own to save money and avoid a battle with attorneys.
From a cost perspective, doing it yourself is the cheapest. This is followed by mediation and the collaborative process, leaving litigation as the most expensive option.
The starting point shouldn’t be to jump straight into litigation. Instead, you should first seek education on which process option might be best for your situation. Once you start to understand the issues you will be dealing with, you will be in a better position to make a decision on how to proceed.
Step 3 (Finalizing)
The final step is coming to agreement on all issues you negotiated in step two, putting them in written format, and submitting them to your local court. This is why the Messy Middle is such a critical point in the divorce. You are determining the content that will go into your final divorce agreement. All those intricate decisions—regarding who gets what and how much—have to be made before you can finalize the divorce.
Now that you are through the Messy Middle, the decision at this step is how the paperwork is completed. Do you do it yourself, or do you hire an attorney?
We Help with the Messy Middle
We created Simplify My Divorce to help with the Messy Middle. After helping over a thousand people work through their divorce, we realized that there had to be a better way.
One day, after spending thousands of hours educating clients on the same things over and over, the vision of Simplify My Divorce was born. We dreamed up an alternative service to help you get organized, prepared, and educated so that you can get divorced with peace of mind while saving time, money, and energy.
Our goal is to make the divorce process more approachable and transparent. We accomplish this by breaking down the traditional walls of high hourly fees, providing access to tools and information that was once only accessible at an attorney’s office.
We will offer the information you need to work through the Messy Middle—all at the click of a button.