With What Kinds of Settlements can a CDFA Professional Help You?

Generally speaking, a CDFA professional works with the divorcing couple to create a settlement that will still be equitable years in the future, not just at the time of divorce. The financial affidavit (known in California as the preliminary financial disclosure) which lists expenses, income, debts and assets for the household serves as the basis for the final projections. Those who don’t hire a CDFA may not understand the implications of the different types of assets (property) they have, which often leads to a poor financial situation for one of the spouses after the divorce process is complete. Attorneys are experts in the law, whereas a CDFA professional is an expert in the financial arena and can work with the attorney and other divorce professionals where appropriate.

In the event that the two spouses are settling themselves, without lawyers, the divorce financial analyst guides them through the affidavit/disclosure and settlement options that will be equitable for both parties.

If the two sides each have hired lawyers, a CDFA professional will work with one client and their attorney, but will consider both sides. Proposing a settlement that is equitable for both spouses helps the attorney support their client in court, when the couple finds it necessary to have a judge rule on their case because they can’t reach a decision. Less than 5% of cases end up in front of a judge, but the CDFA professional can testify in court.

There are alternate methods of settlement as well. The couple can go to arbitration, especially if they’re deadlocked and can’t reach an agreement themselves. The arbitrator will make a decision, and the couple must abide by it. Here the financial expert can present the facts of an equitable settlement to the arbitrator.

Some couples go to mediation, whether on their own or ordered by the court. Unlike the arbitrator, a mediator will not impose the decision but will guide the two sides to it. Mediation often results in better compliance, since the parties have reached the agreement themselves and have ownership of it. (Note this type of divorce is not a good idea if there has been any kind of abuse in the home prior to separation, if there is mental illness on either side, or if one spouse has significant leverage over the other.) The CDFA professional presents the equitable settlement to all the parties to help them make a decision.

Collaborative divorce is becoming more popular for some couples. Here both sides agree to search for a “win-win” situation, using attorneys that have been trained in the technique. Other professionals such as therapists and child advocates may be brought in to the process. This approach works very well but can be more costly than other types of alternative divorce, since all the professionals need to be paid for their time. The most optimal settlement is a “win-win” for both spouses, so the CDFA professional is a natural fit for this kind of practice.

As you can see, a CDFA professional can work with various types of divorce settlements. Their main concern is to demonstrate that the settlement is equitable not only during the divorce, but afterwards too. It’s unethical for a CDFA professional to manage someone’s money while also providing these services, because that can lead to a conflict of interest. If you currently work with a financial advisor, you may want to hire a CDFA professional separately just for the divorce process. Your current advisor can continue to manage your money through the course of the divorce, and make recommendations on the additional assets and income (if any) once a settlement has been reached.