Every divorce case is a financial planning negotiation and requires the development of detailed budget, asset and liability information. Assets and liabilities are relatively easy to pin down with documents and appraisals. Accurate budget information is another thing altogether.
Clients are usually told to sit down with their checks and credit cards and average the expenses in different categories over the past 12 months. Usually, clients short cut their work and use educated guesses. However, this is a mistake. The budget of each party is a real key in the negotiation or trial. It plays a key role in alimony and child support. It also plays a key role in determining whether a settlement is adequate.
Budget software is an absolute must when it comes to calculating budgets. The most common and very inexpensive software for this purpose is Quicken. Checks and other expenses can be easily inputted into the program, and detailed and accurate reports generated even by novices in accounting or computers.
I recently attended a mediation where the woman had nearly doubled her actual budget on her financial statement. My client had entered all of his financial information into Quicken for years. Suffice it to say, the Quicken documentation carried the day on the actual budget for negotiation purposes. It saved a lot of negotiation time and probably gave the other side comfort that the numbers we were offering would suffice for her needs.
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This is a great post. The main reason is because when it does come to divorce it will cost a lot to go through the process. You will need to budget and anticipate some costs so that you do not get caught by surprise.
To be honest though I feel the whole system is pretty much crazy though. You get charged to get married and charged to divorce. No wonder some people rather separate and still be legally married to avoid the costs.
Good to hear about Quicken though and what a great piece of software it really is.