The IDFA conference in Seattle this week was, once again, a great way to get the information you need to really ramp up your business! If you missed it, the next one will be in New Orleans on May 7-9. What a great destination! I think that will be a trip to extend for sure!
Always a hot topic is “Lifestyle Analysis” and Cathy Belmonte-Newman did a great presentation on exactly how she completes one.
What is Lifestyle Analysis? I first heard the term when I attended my first IDFA conference and immediately panicked. “Wait a minute! That wasn’t in my CDFA books! What are they talking about?” Let me define it for you. Lifestyle analysis is simply the detailed analysis of all spending and income in an individual or couple’s situation to establish a marital standard of living. Some states, but NOT most states, have statutes that cite the marital standard of living as a guide to determine spousal maintenance and sometimes even property division.
The national trend in alimony/maintenance legislation is away from marital standard of living. Check your state’s statutes so you know what you’re dealing with. In my state, Arizona, marital standard of living is 100% irrelevant to a maintenance award so I will likely NEVER be asked to do a lifestyle analysis for a case.
HOWEVER, and this is a big one, there is a scenario when almost ALL divorce professionals do need to do a lifestyle analysis and that’s when the primary bread-winner owns his own business and the lifestyle is larger than the reported earnings. This happens all the time especially with doctors, lawyers, dentists, and the like. Remember that as a self-employed person, the goal is to pay as little tax as possible so these folks often run expenses through their businesses at least or at worst, may even be keeping 2 sets of books and doing business “under the table”.
In these cases, a thorough review and analysis of their spending will quickly shine the light on a lifestyle that is being supported by significantly more cash than the business is claiming to earn. Dig, dig, dig!!
If you are handling the divorce for someone who owns their own business, do NOT trust what they tell you they’re making. It’s likely quite a bit more.
Contemplating divorce but worried about your “Lifestyle Analysis”? If so, please contact our team for a complimentary consultation to learn about a smarter divorce solution for you and your family.