Divorce in the Red Zone

Editor's Note: The Red Zone in football is that section of the field between the 20-yard line and the end zone. It is here that the play grows intense and concentration on the task at hand is most important. And it is here that the game is most likely to be won or lost.

As discussed in Parts One and Two of this article, the author ' a divorce financial planner and a member of this publication's Board of Editors ' suggests the Red Zone concept as a means to explain to divorcing parties the stages of the dissolution process and the actions that should be taken at each. After the Preliminary Conference Red Zone, discussed last month, come the Discovery, Pre-Trial Conference and Trial Red Zones.

Discovery Red Zone

The Preliminary Conference marks the beginning of the Discovery Red Zone. A great deal of information will have been collected in preparation for the Preliminary Conference. The attorney should now have a good perspective on what additional information might be helpful and how best to acquire it. Typically, the parties will have agreed to exchange certain records within 45 days of the Preliminary Conference Order. These documents will often cover a period of three years, but the information collected prior to or at the Preliminary Conference may have suggested alternative time periods that would potentially work better. The Preliminary Conference Order will probably also state, “If a party does not have complete records for the time period, the party shall provide a written authorization to obtain such records directly from the source within five days of presentation.” To expedite the discovery process, this directive should be closely followed.

Although there will be other opportunities to collect information in the Discovery Red Zone, it is important to carefully analyze all information as it is collected. This will lead to a better understanding of the underlying parameters and provide further direction to the discovery process. The amount of time available for discovery is limited, so the process should involve a period of intense activity. The more thorough the process, the better the attorney will be prepared to prosecute the case. This will potentially also speed up the window of opportunity for settlement negotiations.

The attorney will likely have the spouse's Statement of Worth by the time of the Preliminary Conference. This also needs to be studied carefully, not just to identify inconsistencies with other information, but to further develop a list of discovery needs. As the discovery process proceeds, additional needs will become apparent, and requests for additional discovery should continue. Software is available to continuously update the client's Statement of Net Worth and regular updating should be done. This will help make current information readily available. I also recommend that the attorney continuously compile, organize and catalogue information as it is collected, preferably electronically and in a searchable format. This should give the attorney quick and easy access to these documents.

It is likely a Notice for Discovery and Inspection will need to be served. The attorney may want to consider developing a specific list for this purpose instead of using a more generic and broader form. I believe it is more likely specific information will be provided when specific requests are made. It will also be easier and less time-consuming to find the information one is seeking if it is not buried in a sea of largely irrelevant paperwork. The divorce financial planner, who should by now be very familiar with many of the financial parameters of the case, can be very helpful in putting together such a list. The planner can potentially also be helpful in determining the need for specific outside experts, analyzing Interrogatories, helping prepare for and analyze depositions or identifying information deficiencies that might require more aggressive approaches.

The end of the Discovery Red Zone is marked by the filing of a Note of Issue and Certificate of Readiness for trial. Once discovery has been certified, this aspect of the divorce process will be difficult to reopen. It is therefore incumbent upon the attorney to make sure as much useful information as possible has been compiled. The reality is that discovery will never be totally complete. Nevertheless, the earlier this process is started and the more effort invested in it, the more useful it is likely to be.

Pre-Trial Conference Red Zone

Between the initiation of the discovery process and the Pre-Trial Conference, especially if the work has been done rigorously, efficiently and in a timely fashion, there should be ample opportunity to attempt to negotiate a settlement. Because of the cost of going to court and the vagaries of the court system, it is very important to try to settle the case. To assist the process, the divorce financial planner can analyze the workability of alternative settlement scenarios, including the effect of taxes. The divorce financial planner can also provide analytical input at strategic or settlement conferences.

If settlement discussions are unsuccessful, one or more pre-trial conferences will need to be held. If the above courses of action have been taken, the attorney should be well-prepared for a Pre-Trial Conference. If these are unsuccessful, a trial date will be set. This marks the end of the Pre-Trial Conference Red Zone.

Trial Red Zone

Preparing for trial can be a time-consuming and expensive process. Unless the estate is large, the cost of preparing for and going to trial can further deplete the marital estate. It can thus have serious effects on post-divorce finances. Even if the case is eventually settled, the costs associated with preparing for trial will need to be paid. Settlement discussions will therefore generally continue until the last possible moment. If necessary, a well-organized and intimately involved divorce financial planner can speed up preparation for trial. If necessary, the planner can also testify at trial. If possible, settlement discussions should also continue.

Added Value of the Divorce Financial Planner

I have discussed several opportunities in this three-part article for the divorce financial planner to bring added value to the process. The divorce financial planner is a generalist with training and experience in all areas of personal finance and money management, including tax planning, retirement planning, present- and future-value calculations, employee compensation and benefits, economic forecasting, estate planning and risk management. This broad perspective gives the planner a unique ability to analyze assets and liabilities and income and expenses as they integrate and interact with one another in both short- and long-term divorce contexts. Because of this, cases involving divorce financial planners are often settled or resolved more quickly, with better results and at less cost, than those using more traditional methods. Divorce financial planning is a fee-only process that does not involve investment, legal advice, or securities or insurance transactions.

Carl M. Palatnik, CFP', CDFA , a member of this newsletter's Board of Editors, is a Certified Financial Planner and Certified Divorce Financial Analyst. He is president of Divorce Analytics, Inc., a provider of divorce analytical services, with offices throughout Long Island and the New York metropolitan area, and founding president emeritus of the Association of Divorce Financial Planners, an international not-for-profit professional association. He can be reached at carlp@divorce%20interactive.com or at 631-470-0331.

Editor's Note: The Red Zone in football is that section of the field between the 20-yard line and the end zone. It is here that the play grows intense and concentration on the task at hand is most important. And it is here that the game is most likely to be won or lost.

As discussed in Parts One and Two of this article, the author ' a divorce financial planner and a member of this publication's Board of Editors ' suggests the Red Zone concept as a means to explain to divorcing parties the stages of the dissolution process and the actions that should be taken at each. After the Preliminary Conference Red Zone, discussed last month, come the Discovery, Pre-Trial Conference and Trial Red Zones.

Discovery Red Zone

The Preliminary Conference marks the beginning of the Discovery Red Zone. A great deal of information will have been collected in preparation for the Preliminary Conference. The attorney should now have a good perspective on what additional information might be helpful and how best to acquire it. Typically, the parties will have agreed to exchange certain records within 45 days of the Preliminary Conference Order. These documents will often cover a period of three years, but the information collected prior to or at the Preliminary Conference may have suggested alternative time periods that would potentially work better. The Preliminary Conference Order will probably also state, “If a party does not have complete records for the time period, the party shall provide a written authorization to obtain such records directly from the source within five days of presentation.” To expedite the discovery process, this directive should be closely followed.

Although there will be other opportunities to collect information in the Discovery Red Zone, it is important to carefully analyze all information as it is collected. This will lead to a better understanding of the underlying parameters and provide further direction to the discovery process. The amount of time available for discovery is limited, so the process should involve a period of intense activity. The more thorough the process, the better the attorney will be prepared to prosecute the case. This will potentially also speed up the window of opportunity for settlement negotiations.

The attorney will likely have the spouse's Statement of Worth by the time of the Preliminary Conference. This also needs to be studied carefully, not just to identify inconsistencies with other information, but to further develop a list of discovery needs. As the discovery process proceeds, additional needs will become apparent, and requests for additional discovery should continue. Software is available to continuously update the client's Statement of Net Worth and regular updating should be done. This will help make current information readily available. I also recommend that the attorney continuously compile, organize and catalogue information as it is collected, preferably electronically and in a searchable format. This should give the attorney quick and easy access to these documents.

It is likely a Notice for Discovery and Inspection will need to be served. The attorney may want to consider developing a specific list for this purpose instead of using a more generic and broader form. I believe it is more likely specific information will be provided when specific requests are made. It will also be easier and less time-consuming to find the information one is seeking if it is not buried in a sea of largely irrelevant paperwork. The divorce financial planner, who should by now be very familiar with many of the financial parameters of the case, can be very helpful in putting together such a list. The planner can potentially also be helpful in determining the need for specific outside experts, analyzing Interrogatories, helping prepare for and analyze depositions or identifying information deficiencies that might require more aggressive approaches.

The end of the Discovery Red Zone is marked by the filing of a Note of Issue and Certificate of Readiness for trial. Once discovery has been certified, this aspect of the divorce process will be difficult to reopen. It is therefore incumbent upon the attorney to make sure as much useful information as possible has been compiled. The reality is that discovery will never be totally complete. Nevertheless, the earlier this process is started and the more effort invested in it, the more useful it is likely to be.

Pre-Trial Conference Red Zone

Between the initiation of the discovery process and the Pre-Trial Conference, especially if the work has been done rigorously, efficiently and in a timely fashion, there should be ample opportunity to attempt to negotiate a settlement. Because of the cost of going to court and the vagaries of the court system, it is very important to try to settle the case. To assist the process, the divorce financial planner can analyze the workability of alternative settlement scenarios, including the effect of taxes. The divorce financial planner can also provide analytical input at strategic or settlement conferences.

If settlement discussions are unsuccessful, one or more pre-trial conferences will need to be held. If the above courses of action have been taken, the attorney should be well-prepared for a Pre-Trial Conference. If these are unsuccessful, a trial date will be set. This marks the end of the Pre-Trial Conference Red Zone.

Trial Red Zone

Preparing for trial can be a time-consuming and expensive process. Unless the estate is large, the cost of preparing for and going to trial can further deplete the marital estate. It can thus have serious effects on post-divorce finances. Even if the case is eventually settled, the costs associated with preparing for trial will need to be paid. Settlement discussions will therefore generally continue until the last possible moment. If necessary, a well-organized and intimately involved divorce financial planner can speed up preparation for trial. If necessary, the planner can also testify at trial. If possible, settlement discussions should also continue.

Added Value of the Divorce Financial Planner

I have discussed several opportunities in this three-part article for the divorce financial planner to bring added value to the process. The divorce financial planner is a generalist with training and experience in all areas of personal finance and money management, including tax planning, retirement planning, present- and future-value calculations, employee compensation and benefits, economic forecasting, estate planning and risk management. This broad perspective gives the planner a unique ability to analyze assets and liabilities and income and expenses as they integrate and interact with one another in both short- and long-term divorce contexts. Because of this, cases involving divorce financial planners are often settled or resolved more quickly, with better results and at less cost, than those using more traditional methods. Divorce financial planning is a fee-only process that does not involve investment, legal advice, or securities or insurance transactions.

Carl M. Palatnik, CFP', CDFA , a member of this newsletter's Board of Editors, is a Certified Financial Planner and Certified Divorce Financial Analyst. He is president of Divorce Analytics, Inc., a provider of divorce analytical services, with offices throughout Long Island and the New York metropolitan area, and founding president emeritus of the Association of Divorce Financial Planners, an international not-for-profit professional association. He can be reached at carlp@divorce%20interactive.com or at 631-470-0331.