Collaborative Divorce: CPAs Play a Significant Role in the Newest Form of Alternative Dispute Resolution

By Megan A. Sartor, CPA, Sax LLP – September 16, 2016
Collaborative Divorce: CPAs Play a Significant Role in the Newest Form of Alternative Dispute Resolution

In New Jersey, there are four official ways to get divorced: litigation, arbitration, mediation or, the newest vehicle, collaboration. On Sept. 10, 2014, Gov. Chris Christie signed the New Jersey Family Collaborative Law Act to legitimize the practice of collaboration in matrimonial matters. The collaborative process, as described by law, is a type of alternative dispute resolution wherein an attorney is retained for the limited purpose of assisting his or her client in resolving family disputes in a voluntary, nonadversarial manner, without court intervention. 

The collaborative process identifies the specific goals and interests of both parties and aims to find a happy medium through open communication and a pledge to not go to court. In addition to developing these objectives, the process includes gathering information, generating professional opinions, testing options and choosing solutions. The collaborative process generally ends when there is either a signed settlement agreement or a termination of the process. 

Before collaboration can begin, both spouses are required to sign a “participation agreement” that states, among other things, that the divorcing spouses are committed to resolving the dispute through the collaborative process. The agreement must also identify the lawyers participating in the process and stipulate that those same lawyers (and their firms) will not continue to represent the parties if the dispute is submitted into court for any reason other than the submission of a settlement agreement. 

The New Jersey Family Collaborative Law Act extends the privilege of confidentiality to all members of the collaborative team, which means that the confidentiality of the divorce proceedings cannot be breached without the permission of the clients. 

The collaborative team consists not only of the divorcing spouses and their respective attorneys but also a mental health professional and financial expert, such as an accountant or financial planner. As the name suggests, the attorneys “collaborate” as colleagues instead of adversaries, while still providing individualized legal counsel to their clients throughout the process. 

The role of the mental health professional is to manage and minimize the emotions often associated with the divorce process. Since emotions can interfere with the ability to think logically and clearly, the nature of the collaboration process relies on keeping them in check. The mental health professional can also assist with issues and concerns involving the children affected by the separation. 

The financial expert is an essential member of the collaborative team. He or she advises and assists the divorcing spouses in understanding and preparing the following:

  • Income analysis.
  • Budgets, both current and prospective.
  • Business valuations.
  • Equitable and tax-friendly property distribution options.
  • Calculation of the tax impact of alimony and support.
  • Projections based on settlement options, which help divorcing spouses understand what their financial worlds will look like in the years to come.

A main advantage of choosing collaboration is the flexibility it offers the divorcing spouses to work out their own agreements and come up with more creative solutions. Unlike the litigation process, which is at the mercy of the court and judges who select options from statutes and case law, the collaborative process allows individuals to play an integral role in structuring the agreement. It helps the divorcing spouses retain more control over the final divorce result. 

Another benefit is the savings — both financial and personal. The collaborative process helps to minimize the costs of the divorce process by avoiding expensive litigation. It also results in savings of time, emotions and other personal investments by helping the parties develop a fair, sustainable agreement that meets both parties’ approval. 

Spouses often enter into divorce proceedings feeling like two separate entities with opposing missions. The goal of collaboration is to bring them to a point of unification, satisfied with the separation agreement and confident that it represents the best interests of all members of their family.

Megan A. Sartor

Megan A. Sartor

Megan A. Sartor, CPA, ABV, CFF, is a senior manager with Sax LLP. She is the leader of the NJCPA Business Valuation Forensic Litigation Services Interest Group and is a member of the Student Programs and Scholarship Committee.

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This article appeared in the September/October 2016 issue of New Jersey CPA magazine. Read the full issue.