Divorce Dollars Done Right (No wallets were harmed in the making of this article)

VOLUME 17 | ISSUE 2

You may have noticed some new letters behind my name. In January, I took and passed the Certified Divorce Financial Analyst exam. We are still working to figure out how my new designation will best serve our clients, but I wanted to elaborate more about what the designation means.

A Certified Divorce Financial Analyst (CDFA®) is a professional who specializes in the financial aspects of divorce. Think of them as a financial guide for couples going through a divorce.

Here are some key responsibilities of a CDFA® professional:

1.        Financial Analysis: They dive deep into the financial situation, looking at:

• Assets: Identifying and valuing all assets, like real estate, investments, retirement accounts, and personal property.

• Liabilities: Listing all debts, including mortgages, loans, and credit card balances.

• Income: Assessing all sources of income, such as salaries, bonuses, rental income, and investment returns.

• Expenses: Evaluating current and future expenses to understand what both parties need financially.

   

This thorough analysis helps create a clear picture of the couple’s finances, which is crucial for making informed decisions during the divorce.

2.        Asset Division: They assist in dividing marital property fairly. This involves:

• Identifying Marital vs. Separate Property: Figuring out which assets are marital (acquired during the marriage) and which are separate (owned before the marriage or received as gifts/inheritance).

• Valuation: Accurately valuing assets to ensure a fair division.

• Division Strategies: Proposing different ways to divide assets, considering factors like liquidity, tax implications, and future growth potential.

The goal is to ensure both parties get a fair share of the assets, considering their individual financial needs and goals.

3.        Tax Implications: They evaluate the tax consequences of different settlement options, including:

• Capital Gains Tax: Assessing the impact of selling assets like real estate or investments.

• Retirement Accounts: Understanding the tax implications of dividing retirement accounts and potential penalties for early withdrawal.

• Alimony and Child Support: Analyzing how these payments affect taxable income for both parties.

By considering these tax implications, CDFA® professionals help minimize tax liabilities and maximize the financial benefits of the settlement.

4.        Support Calculations: They calculate potential spousal and child support payments, including:

• Spousal Support (Alimony): Determining a fair amount based on factors like the length of the marriage, the standard of living during the marriage, and the earning capacities of both parties.

• Child Support: Calculating payments based on state guidelines, which consider factors like the income of both parents, the number of children, and custody arrangements.

These calculations ensure support payments are fair and sustainable for both parties, helping maintain financial stability post-divorce.

5.        Future Planning: They help clients plan for their financial future after the divorce, including:

• Budgeting: Creating a realistic budget that reflects the new financial situation.

• Retirement Planning: Ensuring both parties have a plan to secure their retirement, including strategies for rebuilding retirement savings if necessary.

• Investment Strategies: Advising on investment options to grow and protect assets.

  
  

By focusing on future planning, CDFA® professionals help clients achieve long-term financial stability and peace of mind.

I am excited to bring this new expertise to our services. As a Certified Divorce Financial Analyst, I can offer specialized guidance to help clients navigate the financial complexities of divorce. Whether it’s analyzing assets, dividing property, understanding tax implications, calculating support payments, or planning the future, my goal is to ensure that both parties achieve a fair and sustainable outcome.

We look forward to integrating this designation into our offerings and enhancing the support we provide to our clients during challenging times. If you know of anyone going through a divorce who might benefit from this service, please do not hesitate to give them my contact information.