Divorce or separation can be painful; emotions are flaring and you are about to embark on a journey of many decisions - a portion of which revolve around financial matters. Uninformed decisions, based on less-than-accurate information lead to poor financial choices that will leave their mark for years to come. The decisions you make during this process may be some of the most important economic decisions you make during your life. Preparation and knowledge are key for your success. And a divorce financial professional can help guide you through this decision process.
A Certified Divorce Financial Analyst (CDFA) is a professional specifically trained in the financial issues of divorce. In addition to satisfactory completion of courses and exams, there are work experience prerequisites in order to obtain the designation. He/she can represent one of the spouses or act as a financial neutral working with both parties.
Throughout the divorce process the CDFA will provide financial education and support. Whether it is lifestyle analysis, clarifying and understanding assets, tax ramifications or the short-term and long-term impact of various settlement options, their guidance is invaluable. Often one spouse manages the finances. It is imperative the less involved spouse is brought up to speed so negotiations occur on a level playing field.
As a member of the divorce team, the CDFA can collaborate with the matrimonial attorney, mediator, divorce coach and/or child specialist. Depending on the client's circumstances, the following services can be provided:
CURRENT SITUATION REVIEW
- Data gathering and organization
- Budget preparation and lifestyle analysis
- Asset and liability inventory
- Identify all income sources
- Review and analyze corporate benefits, retirement plans and deferred compensation
- Assess marital and separate property components of assets
- Interpret complex financial documents and products
- Prepare Statement of Net Worth
INTERIM & LONG TERM PLANNING
- Clarify goals
- Determine immediate and future cash flow needs
- Develop and forecast realistic budget
- After tax comparison of asset sales
- Review retirement savings and needs
- Quantify insurance needs
- Project education, college and career training costs
- Maintenance and child support calculations
- Tax ramifications of various support allocations
- Alimony tax recapture computation
- Analyze short term and long term results of settlement options
- Cash flow and net worth projections
- Explore alternative proposals
- Assess overall fairness of agreement
- Assist or oversee asset transfers
- Monitor progress and help keep you on track
- Update financial plan
You may ask, "Doesn't my lawyer do most of that?" The answer is some attorneys are financially savvy and do handle asset division. However, keep in mind, they are trained in the law, not finances. In the heat of negotiation they may be more focused on legalities.
And though knowledge of finances is critical, it's not just about the numbers. Your CDFA should understand who you are, what is important to you, why and what it means to you.
When both parties are financially informed, they feel more confident; negotiations tend to be more amicable and are more likely to last. The expertise and software of a CDFA better help you negotiate your financial future. After all, marriage is about love; divorce is about money and assets... Seek a professional!
(Ivy Menchel is a Certified Divorce Financial Analyst and her practice focuses on the objectives, needs and goals of clients; always beginning with a thorough understanding of their specific situation; committed to bringing creative options to clients for their financial issues; and a strong belief in advisor collaboration. For further inquiries, please feel free to reach out to Ivy directly.)