As you look toward finalizing your divorce, you need to make sure that you complete an accurate lifestyle analysis to help protect your interests. In general, a lifestyle analysis surveys the standard of living you enjoyed while married—by examining your expenses, spending habits, and income. This stage of your divorce is important because it helps you uncover potentially hidden assets and prepares you for your new post-divorce lifestyle.
Here are three reasons to have a financial expert create an accurate report for you and your attorney:
1. Validate spending and possibly uncover hidden assets to be divided during the divorce.
Based on the amount of spending that you and your spouse did during your marriage, a Certified Divorce Financial Analyst (CDFA) or forensic accountant may be able to determine if there were additional sources of income that you have not yet identified. Perhaps your lifestyle appeared to be lavish, but your income was only reported as moderate. If so, a specialist may be able to track down unreported sources of income that your spouse is hiding.
During the construction of a lifestyle analysis, it may be revealed that a spouse has been secretly selling assets or was spending extraneous money on extramarital affairs. While it is not a given that any of these items will become known, these usually unpleasant surprises are frequently uncovered during this process.
2. Understand how your post-divorce financial picture may look.
Creating a new life for yourself after your divorce will mean many financial changes. Creating an accurate lifestyle analysis before your divorce is finalized gives you many opportunities to look at your personal spending habits—in comparison to your new income as a single person.
Budgeting is an important part of any stable, financially healthy situation. Your divorce signals a reduction in your income, and you may also be simultaneously increasing your cost of living by maintaining two separate households.
Make a more accurate budget to keep your financial affairs in order and find out your recurring spending habits. In this way, you can base your day-to-day living expenses on a lifestyle analysis. It will save you a few extra steps and immediately notify you of any lifestyle changes you might need to make once you are on your own. You have to take the time to examine where your money was going during your marriage to know where you need to to put it in the future.
3. Receive the alimony you deserve.
If one spouse has made significantly larger contributions to the household income, the other spouse may consider seeking an alimony payment to maintain his or her lifestyle. An accurately constructed lifestyle analysis would demonstrate that the expenses of maintaining that lifestyle were not exaggerated to strong-arm the other spouse into a higher alimony payment.
A lifestyle analysis lays out the real-world expenses incurred by the income level present within the now-dissolving marriage. It can help you find out the exact alimony you deserve from your spouse.
While these may be the top three reasons to have a lifestyle analysis completed by a CDFA, you have to take your future financial success into your own hands. Taking the time to examine marital spending gives you a clearer picture of both the past and the future. Do not leave your finances to chance.