In the beginning of a divorce process, both parties spend a great deal of time trying to clearly understand all the financial aspects and terminology of the separation. By bringing on a certified divorce financial analyst® (CDFA™) professional, attorneys can ensure their clients enter the process with the knowledge to make educated decisions.
No. 1 – Get an Early Start
The average length of the U.S. divorce proceeding is one year. With a CDFA professional on the team, clients will be able to get a fuller picture of the financial decisions before them early on. This will empower the client to move forward and settle matters quickly.
No. 2 – Save Money & Time
By using a CDFA professional, your client can have a clearer view of their financial future. It is only at that point that they can approach a legal settlement that fully addresses their 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 professionals can educate their clients by providing a thorough knowledge and understanding of the often-complicated financial decisions.
No. 3 – Avoid Long-Term Financial Pitfalls
Working with a client and their attorney, a CDFA professional can forecast the longterm 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.
No. 4 – Develop Budget & Avoid 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.
No. 5 – Reduce Apprehension & Misunderstanding
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.
Working On a Collaborative Law Team
CDFA professionals can be certified in collaborative law, which allows them to be hired as a financial neutral through an interdisciplinary family collaborative practice. In this approach, the husband and wife work directly with their lawyers on an equitable settlement. A neutral mental health counselor or a neutral financial expert can be brought in on the case to assist the team. Personally, I believe this type of divorce process offers the best experience for all parties and should continue to be used more frequently.
Clarification of Work With Forensic CPAs
A forensic CPA can perform audits, business valuations and search for hidden assets, essentially building a case based on forensic history. A CDFA does not perform the above. They do have the ability to evaluate a divorce settlement based on future projections to make sure the settlements make sense based on financial expectations. Both professionals can prepare the financial affidavits and lifestyle analysis, accordingly.
Other resources of a CDFA include:
- Advising in and supervising the financial aspects of divorce.
- Attendance at deposition, mediation, and/or court as requested by the client.
- Budget preparation.
- Completion of the mandatory financial affidavit and review of the opposing side’s affidavit.
- Educating client on finances.
- Generation of equitable distribution option.
- Analysis of income streams.
- Inventorying of all financial documents received and preparation of list of additional financial documents to request.
- Analysis of lifestyle and its sustainability.
- Mediation support.
- Preparation of financial related questions for deposition.
- Rendering of expert witness testimony as a CDFA.
- Settlement option generation and support.
A CDFA works closely with family and matrimonial lawyers to help them assist their clients to obtain the very best divorce settlement. Considering this is the most important financial decision that a client makes and you only have one shot at this, it only makes sense to have a CDFA on your team. Craig Richman