What are the major benefits of using a certified divorce financial analyst in a divorce ?
Many people, both divorcing parties and attorneys struggle with where to place a CDFA in the divorce process and how to use them effectively. So here are some pointers:
1. CDFAs are experts in the finances of divorce. By that I mean they understand not just the complex issues surrounding who normally gets what and why, but also what that is likely to mean to the divorcing party’s finances over the long run. Right now the best example I can think of is what are the implications of taking on a house with a mortgage in a divorce, as opposed to trading it for cash or selling it jointly with your soon to be ex spouse. This is an analysis with far reaching implications in the new real estate market. Now more than ever it may not be a good idea to take the house in the divorce, but to know whether you should or not, takes a financial planning approach that a CDFA is perfectly equipped to bring to the table.
2. CDFAs are an inexpensive addition to the mediation process in your divorce. With your attorneys blessing, they can attend mediation with you to help you determine the wisdom of accepting an offer or making a counter offer. We come to the mediation process with a computer and all the software we need to have you more prepared than the other side, and since preparation is 90% of success, you can rest assured that you will understand why you settled for what you did in the mediation process. You will also understand the likely effects, both long term and short term , on your life.
3. Don’t listen to the untrained when getting a divorce. Your attorney knows the law and you should listen to their advice at all times. By the same token, your attorney is too busy with the law to be an expert in financial planning, so avoid overly simplistic settlements. All too often we are seeing women taking a house as lump sum alimony as the default settlement. Although that can be attractive, it should be measured and analyzed before it is accepted.
4. Extensive work is done by a CDFA long before mediation happens. Typically we meet with our clients 5 to 10 times and with our clients and their attorneys at least 2 to 3 times prior to mediation so that a financial strategy is laid out with many variations. Having an understanding of the possible approaches relieves the stress of mediation and makes for better decision making.
5. After the divorce, a CDFA will help you with account transfers, transfers of IRAs and reconciliation of the settlement to make sure you get what you signed on for. Your attorney then receives a summary of the assets that have been transferred and can close the case or help chase assets if necessary. This is a much more cost effective approach to paying an attorney by the hour to accomplish housekeeping tasks.
6. Finally, you can actually save money by using a CDFA as there are certain financial tasks (like filling out a Financial Affidavit) that you can do using a CDFA, who then coordinates it with your attorney. This leaves your attorney as the CEO of your divorce free to work on the bigger more important ideas, with more information easily available, as well as insight into the implications of any suggested settlement proposals.
7. CDFAs are better versed than attorneys on retirement plan issues. You can avoid costly QDROs and tax errors by consulting a CDFA during your negotiation phase.
A CDFA will typically add two to three thousand dollars to the expense of a divorce. With assets over $250,000 you should consider this as a serious option for improving the quality of your divorce.
If you would like to find out more about how we can assist you, please feel free to call for a complimentary consultation. If you are reading this article and wondering what your options are, it is a nudge to call. If you already have an attorney, it is not too late. Whether you have started down the path of divorce yet or not, we can help you.