Why Financial Strength is Crucial in Divorce
Connecting with the right attorney is critical in divorce. But if you have accumulated a significant asset portfolio during your soon-to-be dissolved marriage, hiring a third party financial expert can be just as important. A Certified Divorce Financial Analyst (CDFA) can help you negotiate your financial position and save money in the process. A CDFA can be one of your strongest advocates in negotiating an equitable divorce settlement. This is true whether the process is collaborative, or is pursued through mediation or litigation.
Save Money, Strengthen Your Position
You can realize significant cost savings by jointly working with a neutral financial analyst by eliminating the need to pay each lawyer individually for this service. You risk leaving a significant amount of money on the table if you aren’t enlisting an expert trained in evaluating and planning for your financial future.
This is especially true if the dispute is contentious or if you have been less involved in managing marital finances. A CDFA can help you level the playing field. They evaluate the full scope of your marital assets and liabilities by compiling a comprehensive assessment of your assets and debts. This is often one the most difficult and time-consuming elements of the divorce process.
Next the CDFA will analyze the income and expense streams of each party, and forecast expenses after the divorce is finalized. Your CDFA can help you plan for future cash flow needs you may never have considered, such as expenses associated with career training.
Your CDFA will assist you in negotiating child support and spousal support agreements. Divorcing spouses—and their attorneys—often emphasize securing the largest possible monthly payment from the settlement. However, if you have the means to comfortably support you and your children, it may be financially advantageous to accept reduced monthly support in exchange for a larger share of the investment assets accumulated through the marriage.
Discovering Assets, Avoiding Pitfalls
Many couples discover that their most significant assets are held in retirement accounts and pension plans. Your CDFA can assist you by modeling different asset parceling strategies and how these scenarios will impact you decades into the future. These scenarios not only reflect future income from current retirement assets, they model potential income from future retirement asset accumulation based on age and earnings potential as well.
But beware. In settlement negotiations there lurk two asset categories in which a win isn’t always scored as a victory: the family home and investment assets.
Divorcing couples often expend considerable time and energy fighting over which spouse retains possession of the marital home. A CDFA can help you determine whether keeping this asset is a benefit, or is a future financial liability. Maintenance cost can skyrocket as the family dwelling gets older. Couple that with the potential for rising property taxes and the family home may hold more liabilities than you first imagined. Depending on mortgage balances and market conditions, selling off the home now, rather than later, may be in your best interest.
CDFA: Discovering your Financial Strength
When it comes to the investment portfolio, large balances often camouflage huge future tax bills. A CDFA can determine the most equitable division of these assets by keeping a focus on future benefits and potential cost and tax liabilities. With the help of a CDFA, you may realize it’s possible to come out ahead in a settlement when you negotiate to retain assets with a smaller face value.
The key to a negotiating a successful divorce settlement is having a clear view of the financial picture—now, and well into the future. A Certified Divorce Financial Analyst can evaluate all marital assets and liabilities and accurately assess their impact on your future needs. Think of a CDFA as the one professional dedicated to devising a settlement strategy that truly serves your best long-term interests.