Many individuals going through the divorce process find that their lawyer isn’t trained in understanding and educating clients on the financial impacts of their financial settlement after divorce. This is not surprising as divorce attorneys are trained to understand the laws surrounding divorce, not the long term financial implications about what is likely to be the largest financial transaction of your life.
A Certified Divorce Financial Analyst® (CDFA®) is specifically trained and certified to provide expertise on financial issues of divorce. Many questions come up during the divorce process that a CDFA® on your team can help to answer:
- How do we divide retirement accounts & pension plans?
- Who gets the house?
- What tax issues should we be concerned with?
- How will the lower-earning spouse survive financially?
- How do we value our property?
- What is community property and what is separate property?
- What happens if a support paying spouse dies?
Case Study:
John & Jane
John and Jane are divorcing and Jane, who managed the families finances during their marriage, approached John with an offer to split their assets 50/50 to be as fair and equitable as possible.
- Jane keeps the brokerage account worth $400,000
- John keeps his own 401(k) plan worth $400,000
- They will sell their home and split the proceeds evenly
John reviewed the offer with his attorney who also thought the 50/50 split seemed to be fair as both parties would end up with the same value of assets today. If John’s team had a CDFA®, they would have been informed that the after-tax value of both investment accounts should be taken into consideration.
The 50/50 split that John agreed to ended up costing him $45,000 more than Jane in taxes.
Learn more about the CDFA® designation at the Institute for Divorce Financial Analysts at https://institutedfa.com/learning-center/what-cdfa-professional/# .
If you are in the Spokane or Inland Northwest area and need help with your divorce, schedule a strategy session today to learn how the Resolve Divorce Solutions team can help.