Why Hiring a CDFA? Before Divorce is the Best Decision You Can Make to Get the Settlement You Deserve

During divorce, spouses agree to divide assets based on the "on paper" value of these assets today versus the "true" value of these assets in the future when these assets (stocks, bonds, home equity, retirement accounts, etc) are sold and converted to spendable cash. As a result, determining what is a fair & equitable is often subjective and confusing.

Taxation on these accounts can drastically affect the "fairness" of the division of assets and ultimately lead to one spouse being significantly shortchanged or even worse, being handed a large IRS bill they were not planning for or expecting.

Surprisingly, these issues can occur in cases where attorneys are involved however, an even larger concern is for the growing number of divorcees who are trying to "do it alone"...unrepresented.

In either case, investing in the expertise of a Certified Divorce Financial Analyst (CDFA?) before divorce can be the best decision you can make to get the settlement you deserve.

A CDFA? can help by calculating a short-term and long-term financial impact of any proposed divorce settlement. They also provide valuable information on financial issues that are related to the divorce, such as tax consequences, dividing pension plans, continued health care coverage, stock option elections and much more.

While some attorneys consult with CDFA? during the divorce, it is highly suggested that folks considering divorce consult with a CDFA? before initiating the divorce. This will provide a much clearer financial picture and lead to a much more efficient (less costly) divorce.

According to the Institute of Divorce Financial Analysts website:

Here are the Top Five Reasons for Hiring a Certified Divorce Financial Analyst? During the Divorce Process

1) Financial analysis conducted early in the divorce process can save time.

The average length of the U.S. divorce process is one year. In the beginning stages of the process, both parties spend a great deal of time trying to get a clear understanding of the financial aspects and terminology of the separation. A Certified Divorce Financial Analyst? (CDFA?) professional can explain all financial aspects of the pending decisions and help to empower their client to make educated decisions throughout the proceedings.

2) A CDFA can help their client save money during the divorce process.

By using a CDFA professional, you can have a clearer view of your financial future. Only then can you approach a legal settlement that fully addresses your financial needs and capabilities. A legal settlement that floats back and forth between attorneys, without the client having a clear understanding of all financial ramifications, can be detrimental, time consuming and expensive. CDFA professional's can educate their clients by providing a thorough knowledge and understanding of the often-complicated financial decisions.

3) A CDFA can help his/her clients to avoid long-term financial pitfalls related to divorce agreements.

Working with a client and their attorney, a CDFA professional can forecast the long-term effects of the divorce settlement. This includes details of all tax liabilities and benefits. Developing a long-term forecast for their financial situation is far better than a short-term snapshot. Financial decisions must be made that not only take care of immediate family needs, but retirement needs as well.

4) CDFA professional's can assist their clients with developing detailed household budgets to help avoid post-divorce financial struggles.

A CDFA professional can help clients think through what the divorce will really cost in the long run and develop a realistic monthly budget during the financial analysis process. Expenses such as life insurance, health insurance and cost of living increases must be taken into consideration when agreeing on a final financial settlement.

5) Using a CDFA professional can reduce the amount of apprehension and misunderstanding about the divorce process.

Misinformation and misconceptions about the divorce process can be detrimental. Many have false expectations that they will be able to secure a divorce settlement allowing them to continue with their accustomed style of living. Financial divorce analysis helps to ensure a good, stable economic future and prevent long-term regret with financial decisions made during the divorce process.