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Edward Sachs CPA/ABV CFF

I just completed a pro bono matter in the 11th Judicial Circuit Model Collaborative Program in Judge Sarah Zabel’s division. We were able to help a young couple with one child get through the final part of their divorce in a very peaceful fashion. But as our team debriefed and completed the FACP survey, the cost of a Collaborative divorce became very evident to me. In this matter, there was no equitable distribution or alimony, just child support and parenting issues, most of which they had already put in place. Even if the four professionals had charged reduced rates, I estimate the billing would have been close to $10,000. There is just no way around it when you have four professionals.

On the billing side, I recently completed one Collaborative case in which my bill, in addition to the two attorneys’, were each around $8,000, and the facilitator’s bill was $6,000. These parties were excellent Collaborative team members and had no children that were minors. The case was settled in an unconventional way that would not happen in Court. Because of unusual circumstances, there is no question this matter would have cost the parties two to three times more in litigation.

And finally, I had another recent case with total fees of more than $130,000. The two attorneys were about $100,000, I was around $20,000, and the facilitator was $10,000. To me, the fact that the attorney’s fees were so much is indicative of the client problems and the difficulty of the issues. In litigation, this case would be ripe for much higher forensic accounting fees, and the issues could have gotten nasty. The team, in our debrief, agreed that the matter would have cost at least twice as much in litigation.
So, the answer is that a Collaborative divorce is not cheap, but in my opinion and experience, it is certainly cheaper.My advice to those who can’t afford a Collaborative divorce and don’t qualify for pro bono programs is to consider Financial Mediation. Learn more as I discuss Financial Mediation on Monday.

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Edward Sachs CPA/ABV CFF

As we all know, after determining the equitable distribution we must calculate how much income can be expected to be earned from investible assets.  What is a reasonable rate of return to calculate on assets being distributed?

A recent study published by Crandall, Pierce & Company, an investment research firm in Illinois, shows that with a mix of 40% stocks, 50% bonds and 10% in cash the one year returns for the year ending September 30, 2017 averaged 9.1%.  Three-year returns ending on the same date for the same mix averaged 6.1%, five-year returns averaged 7.5% and ten-year returns averaged 5.0%.  Keep in mind that the ten-year average includes the 2008 market crash.

The study, utilizes information from Standard & Poor’s 500 Stock Index, Intermediate Treasury Bonds and 90-day Treasury Bills.  The ten-year study shows rates of return ranging from 2.9% for 90% bonds and no stock to 6.7% for 90% stocks and no bonds.