No one enjoys talking about divorce, but with nearly 50% of marriages ending with a signed divorce judgment, it’s often a topic you can’t avoid. If you and your spouse don’t have assets, children, or disagreements about alimony, you may be able to make it through the divorce process without an attorney or expensive legal bills.
However, for most couples, divorce isn’t that simple and at a minimum, requires both parties to hire attorneys to navigate the complicated legal system. It’s understandable that after retaining an attorney, the last thing you want to do is hire another expert to join your legal team, but most attorneys aren’t tax or financial experts. If you and your spouse acquired a lot of assets throughout your marriage, you might benefit from hiring a certified divorce financial analyst for your case.
What Is a Certified Divorce Financial Analyst?
A certified divorce financial analyst (CDFA) is a professional with extensive knowledge of tax law and marital asset distribution in the context of a divorce. A CDFA also knows how to navigate the divorce process and prepare clients for financial success after divorce.
What Role Does a Certified Divorce Financial Analyst Play?
A certified divorce financial analyst can be an essential part of your divorce team, but does not replace an attorney and cannot provide you with legal advice.
A CDFA will help you and your attorney understand how your divorce agreement will impact your future financial stability. The CDFA will help identify short-term and long-term effects of dividing marital property and if possible, assist you in proposing an alternative property division settlement that ensures a better financial future for you. The expert will also review your financial information and project how much money you need to maintain your current lifestyle after your divorce.
A CDFA can help you determine if you can (or should) keep your marital home, identify future financial goals, develop a budget, and identify any divorce-related tax consequences. If necessary, the CDFA can also testify as an expert financial witness on your behalf during the trial.
Do I Need to Hire a Professional?
Not all divorcing couples need a certified divorce financial analyst, but it’s very common for spouses to underestimate the real value of their assets. If you and your spouse own a business, significant property, or retirement and investment accounts, it might be in your best interest to hire a professional. Valuing pension accounts can be especially complicated, and a CDFA can assist you in making sure you pay or receive what you deserve.
Even in cases where you and your soon-to-be-ex-spouse don’t have many assets to divide, if you’re unsure of how you’ll stay on your feet financially after the divorce, a CDFA can help you create a post-divorce budget.
Specifically, if you need assistance with any of the following, a qualified CDFA may be able to help you:
- valuing and dividing retirement accounts, pensions, and investments
- determining the amount and duration of spousal support (alimony)
- setting up a post-divorce budget
- valuing assets and debts, and the financial implications of the proposed property settlement
- valuing the marital home, especially if one spouse owned the property before the marriage and asked to recoup premarital contributions in the final agreement, and
- determining the tax implications of property division, child support, and alimony.
How Do I Select a Qualified Certified Divorce Financial Analyst?
Like attorneys, not all financial analysts are the same. The first step in finding someone to work with your legal team is to ask your attorney for a recommendation. Often attorneys have existing relationships with professionals. If your attorney has a company or individual CDFA, it’s usually because the expert has produced positive results for clients in the past.
If you’d prefer to find a professional on your own, be sure to verify the CDFA’s credentials to ensure the analyst meets state standards. According to the Institute for Divorce Financial Analysts, a CDFA must have a minimum of three years of professional experience in finance or divorce and a 4-year bachelor’s degree to enroll in certification programs. Once enrolled, prospective CDFAs must complete a minimum of four exams before becoming certified.
To remain in good standing, CDFAs must maintain their certification by paying an annual fee and providing proof of divorce-related continuing education every two years. Before you proceed with hiring your analyst, ask for proof of current license or certification.
If you’re going through a divorce or you see divorce in your near future, consider hiring a certified divorce financial analyst to prepare a thorough analysis of your finances to help prevent you from signing a marital settlement agreement that will hurt you in the future.