Lifestyle Analysis in Divorce

Why do you need a lifestyle analysis?

In North Carolina, when considering the amount, duration, and manner of payment of alimony, the court considers 16 factors, one of which is the standard of living of the spouses established during the marriage.  If you’ve hired an attorney, one of the things he or she will ask you to do is fill out a Financial Affidavit.  In this form you are providing, under penalty of perjury, a summary of your assets and liabilities as well as your income and expenses. It’s critical that this form be completed thoroughly because your alimony, division of assets and even child support will be based in large part on what you provide in this document.

People in the throws of divorce can be too emotionally overwrought to deal with the challenge, particularly if they are someone who has not been a budget keeper.  So they guess or estimate.  Depending on their attorney and/or the fee arrangement with them, their affidavit may or may not be reviewed for completeness.  Even then, they will only be looking for glaring errors. I know in  my practice I often see budgets that are way off the mark.

A thorough Lifestyle Analysis could very well make the difference between living the life you were accustomed to or one that is considerably different.

Preparing a Lifestyle Analysis can you ensure a better financial outcome

A Lifestyle Analysis is the process of analyzing the income and expenses of the parties, including the income claims of the spouse so they can be confirmed or refuted. Particularly where they has been an affluent lifestyle, the Court will require support for the expenses that are being claimed.  Hidden sources of income or dissipation of assets can also often be uncovered in a Lifestyle Analysis.

A Lifestyle Analysis reconstructs the day-to-day living expenses incurred during your marriage and the spending habits of both you and your husband, by category.

Generally, a Lifestyle Analysis will include the living expenses during the last several years of your marriage but before income and spending habits changed in anticipation of divorce, and can include an analysis of:

  • bank, brokerage and credit card accounts
  • personal and business income tax returns
  • recurring and ordinary expenses within each category of expense (clothing, food, housing, entertainment, travel, etc.
  • unusual, non-recurring and/or seasonal expenses.

Who should prepare my Lifestyle Analysis?

Your family law attorney (with the help of their paralegal) may offer to help you prepare a Lifestyle Analysis, but he or she is unlikely to have the specialized training and expertise in divorce finances, or the specialized software, to do the job as thoroughly, efficiently, or cost-effectively as a Certified Divorce Financial Analyst™.  Some might try to get this done with the help of their CPA or financial advisor but divorce finance is simply not their specialty, so they haven’t had the advanced training or hands-on experience needed.  Some large brokerage firms, like Merrill Lynch, Morgan Stanley, UBS, and Wells Fargo, might have a CDFA but they don’t permit their financial advisors to use certain software or provide certain types of advice or reports that are needed when preparing a Lifestyle Analysis.

Family Law attorneys should welcome the expertise and support of a Certified Divorce Financial Analyst™ when it comes to the daunting task of conducting a Lifestyle Analysis or providing complex financial projections that justify their client’s position at the negotiating table or in court.

Although gathering the documents to complete a thorough Lifestyle Analysis can seem daunting, and may be expensive if your spouse is intent on withholding information, the result, particularly for an affluent couple, is extremely valuable.

If you would like to read more about Lifestyle Analysis, here is an article by an expert in this area.


Digging Deeper Into Lifestyle Analysis

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