It's rare for divorce to go smoothly. Even if couples agree to proceed amicably, the issues of childcare, the legal process, and increased expenses always create challenges. When acrimony infects the process, these challenges can become insurmountable, leading to dysfunctional relationships with children and long-term financial and emotional distress for both partners. Working with a certified divorce financial analyst eliminates much of this distress.
The Complications of a Divorce That a Certified Divorce Financial Analyst Helps Simplify
In the United States, about 50% of marriages result in separation or divorce. Such a stark statistic demonstrates the importance of managing a divorce properly. The more amicable and efficient the divorce process, the less damage to all involved; however, achieving this result is complicated by many factors.
Changes in the relationship between ex-spouses can be complicated enough, especially if they have children. Other relationships also change. Divorce complicates relationships with friends and family, with some people trying to remain neutral while others take sides. Holidays can become difficult times as family traditions change.
The Effect on Children
Children caught between warring parents is a tragedy. Much trauma can be saved if the parents agree on how to raise the kids through a common agreement. If they cannot do this, the court will decide, which can increase trauma to children and lead to a result that is less than optimal for the kids. Parents know their children and what they need far better than the court.
While married, couples take out loans and acquire goods. During the divorce, assets and liabilities must be split. This process, unfortunately, becomes very complicated. Issues including child support, housing, savings, and taxes make dividing the marital property and responsibilities difficult, often leading to one side being forced to carry more of the burden. In addition, divorcee status makes it more difficult to obtain insurance and credit. Thankfully, there are ways to manage these issues that make the process easier and more cost effective.
Understanding how to most effectively manage finances in divorce saves money, time, and stress. By avoiding the many financial pitfalls of divorce, divorcing couples can reach settlement agreements faster and retain more of their assets. The faster a settlement occurs, the less money must be paid to the lawyers, leaving both partners with more in the end. A more effective settlement makes the process far easier on children, who are better able to adjust to the new situation. Certified divorce financial analysts provide divorcing clients with the analysis and advice they need to protect themselves and their children.
What Is a Certified Divorce Financial Analyst?
Financial planners help their clients reach important goals. Common financial planning goals include retirement, college savings plans, investment portfolios, saving for a home, and insurance. Many couples utilize the services of a financial planner when married. When the prospect of divorce becomes real, they often fail to realize that a financial planner is now even more important. Mistakes in the divorce process can lead to financial problems that plague divorced people for the rest of their lives, making the divorce more difficult on their children.
Certified divorce financial analysts are specially trained to analyze a divorcing couples' finances and answer the tricky questions that often escape the understanding of divorce attorneys or regular financial planners. Attorneys are trained in the law, not financial analysis. Likewise, regular financial planners understand savings, investment, and insurance but not the complexities of a divorce decree's impact on finances. For example, in one case, a certified divorce financial analyst spotted an important tax implication that the divorce attorney missed. Splitting investments the way the other side proposed burdened his client with all the taxes.
This analysis saved the client tens of thousands of dollars. Certified divorce financial analysts are effective because they blend the skills of financial planners and accountants and use specialized knowledge to apply them to divorce.
The Skills of a Certified Divorce Financial Analyst
Financial planners pride themselves on helping clients reach their financial goals. In general, they start the financial planning process by identifying these goals and then take inventory of their clients' current assets and liabilities. They then examine ways to meet these goals, using a certain set of assumptions. Assumptions include income, expenses, inflation rates, and investment returns. Because markets and clients' financial situations change, the plan must be updated regularly. During reviews, the planner determines if clients are on track and suggests changes if they are not.
Where financial planners are concerned with the future, accountants focus on examining the present-day situation. Their skills are invaluable during a divorce. For example, they can calculate the taxes on dividing property and the combined effect of child and spousal support. Accountants also perform a very important function that is sometimes relevant in divorce: uncovering hidden assets. By using forensic accounting techniques, they can spot patterns that indicateassets have been moved to locations where they are more difficult to spot.
12 Ways a Certified Divorce Financial Analyst Assists Clients
Certified divorce financial analysts combine the skills of an accountant and forensic accountant with goals based financial planning. To earn the certified divorce financial analyst designation, financial planners must demonstrate their ability in accounting and financial planning. While on the job, certified divorce financial analysts help both the client and lawyer understand the impact of financial decisions, divorce settlements, and divorce decrees on the client's financial future. As part of the litigation team, certified divorce financial analysts provide litigation support in many areas, including the following:
- 1Identifying short- and long-term impacts of dividing property in various ways
- 2Understanding the tax implications of divorce settlement options
- 3Pension and retirement plan impacts
- 4Determining whether it makes sense to keep the matrimonial home
- 5Figuring out how much the client can afford for housing after the divorce
- 6Determining how the client's insurance needs have changed
- 7Providing reports on how divorce settlements will impact the client in the long term
- 8Supplying expert witness testimony
- 9Collecting financial and expense data
- 10Helping clients identify their future financial goals
- 11Developing a budget
- 12Determining the costs of the children's education
Is There a Need for a Certified Divorce Financial Analyst?
Sadly, financial problems often tear families apart. In fact, finances are one of the leading causes of divorce. If the couple could not manage their financial difficulties and disagreements during the marriage, then they tend to fare even worse at settling them effectively during the divorce process. Decisions are often clouded by emotion, and this can lead to the divorcing couple making decisions that make their lives harder in the future. A certified divorce financial analyst can lay out the financial implications of these decisions and show a path where the divorcing couple and their children can remain as financially secure as possible.
A certified divorce financial analyst provides financial analysis and accounting services in order to specifically answer the questions every divorcing couple is concerned with. Often, the most burning questions center around taking care of the children. Deciding where the children will live takes careful consideration. Parents want the best for their children, but they also must consider what the family can realistically afford after the divorce. For example, remaining in the same community may require moving to a less expensive home.
These are difficult choices that a certified divorce financial analyst can help families understand the implications of Divorcing couples also have questions regarding who will pay for the kids' education and medical treatment. These questions play into the question of whether it makes sense to keep the matrimonial home and who should keep the house. CDFAs also help answer important questions related to these critical issues:
Failing to understand the full implications of these issues sets divorcing couples up for trouble in the future. In many cases, divorcees end up with divorce decrees that they do not fully understand. They may be pushed into agreeing to certain terms without a full understanding of the implications. Many times, this results in an expensive future battle to try and alter a flawed divorce decree. Working with a certified divorce financial analyst prevents a needless complication like this from coming up in the future.
If you or your spouse have assets with significant value, the ramifications of divorce are serious for your finances in the future. Divorce also comes with severe emotional complications, which makes financial decision making difficult. Hiring a certified divorce financial analyst helps avoid making emotional decisions about finances. It's always wise to avoid making important decisions while upset, but divorce often pushes people to do just that. A certified divorce financial analyst ensures decisions made are financially sound.
Finding a certified divorce financial analyst is as easy as asking your divorce attorney for a recommendation. The Institute of Divorce Financial Analysts also provides a database of qualified professionals. Regardless of how you find a certified divorce financial analyst, if you are going through a divorce, you'll be glad you did. They clarify your position, help you plan for the future, and give you the peace of mind of knowing that money worries need not plague your future.