H.J. Cummins
Minnesota Star Tribune
April 22, 2002
Not long ago, a divorcing couple came to financial planner Joyce Franchett with an equal but disastrous division of assets.
The wife would keep her small salary and the house. The husband would take his larger salary and the family investments, including his 401(k). That split right down the middle: $100,750 each.
But using a special computer program, Franchett ran those numbers ahead 20 years for each one of them, taking into account everything from living expenses to general inflation to return on investments. In two decades, the wife would be about $150,000 in debt, and the husband worth $1.8 million.
"They had thought their plan was even," Franchett said, "but it didn't show the eventual results of their division."
Franchett suggested giving more spousal support and a piece of the 401(k) -- likely to grow in value faster than a house -- to the wife. The future suddenly looked fairer.
The computer program is the central tool in a new financial specialty called Certified Divorce Planners. It started about 10 years ago, mostly to help divorce attorneys calculate and then argue for good financial settlements for their clients, according to Jacqueline Gold, executive vice president of the Institute for Certified Divorce Planners in Southfield, Mich., which does the training.
There are now about 450 nationwide, with a half-dozen in Minnesota, including Franchett in Minneapolis.
"We've kind of had an explosion over the past three years," Gold said.
"Business is good, unfortunately," said David Lindberg, a planner in Roseville.
The projections can't guarantee fairness down the line, said planner Nicole Middendorf, who works in Wayzata. After all, one spouse may win the lottery -- or be stuck with a 401(k) from Enron.
But their mathematical neutrality can tamp down the often charged emotions that surround divorce settlements, Middendorf said.
Gold said most certified divorce planners work with an attorney who represents either the wife or the husband in a divorce. In Minnesota, some are hired jointly by both divorcing spouses, as a neutral financial adviser.
Planners' fees typically run from $100 to $200 an hour. And, for example, Franchett estimated that she worked three to four hours with the couple who needed to rethink their "equal" division of assets.
Middendorf said she explains to clients that they need to cover four basic financial necessities: a place to live, income, low debt and retirement assets. A common mistake by wives, she said, is to give up the last three in trade for the house, because of an emotional attachment or for the stability of the children.
"I once saw a woman who'd lost her house through foreclosure," she said. "How stable is that for the kids?"
Lenore Farkas of Eden Prairie said Franchett helped her and her ex-husband work out their financial plan last year. The couple agreed he would help support Farkas, 52, while she begins a second career as a personal coach, and she will pay him back from a pension account when she can withdraw from it.
"I liked that the process was equal, above board, and all out in the open," Farkas said. "Now we can get on with our lives."
-- H.J. Cummins is at hcummins@startribune.com.