Possible Benefits of Creative Settlements in Divorce
A couple came to see me on the referral of a friend. They had visited a family law attorney together in an attempt to amicably handle their dissolution, which made the attorney VERY uncomfortable. He explained that he had to either represent one of them or could only do their documents for them. They asked, "Then how do we figure out the property settlement?" He replied, "Just split every asset and every debt 50/50."
The couple had been married over 20 years, had a net worth less than 1mm, but had long-term financial assets that added a level of complexity. The idea of a 50/50 split on each item just didn't feel like the right way to handle things. Sure enough, when I reviewed their balance sheet there were numerous opportunities for creativity to shift taxation to the lower wage earner to save both of the spouses money.
Just for fun, I did two proposals, one reflected the attorney's idea with a 50/50 on each item. The second reflected my creative property settlement, still a net after tax 50/50 to each party. Our creative settlement saved EACH OF THEM over $20,000 in taxes over the long term. They paid me $3,500 for my services and I saved them over $40,000! This is just one example of the kind of value we can bring to our clients.