In a collaborative divorce, the role of a Certified Divorce Financial Analyst, or CDFA Professional, is to help both the client and lawyer understand how the financial decisions made today will impact the client’s financial future. A CDFA Professional is someone who comes from a financial planning, accounting, or legal background and goes through intensive training to become skilled in analyzing and providing expertise related to the financial issues of divorce.
As a part of the collaborative divorce team, the CDFA Professional provides the client and lawyer with data that shows the financial effect of any given divorce settlement. They are familiar with tax issues that apply to divorce, and have background knowledge of the legal issues. They are trained to interview clients so as to:
- Collect financial and expense data
- Help clients identify their future financial goals
- Develop a budget
- Set retirement objectives
- Identify what kind of lifestyle they want and can afford
- Determine the costs of their children’s education
A CDFA Professional identifies the short- and long-term effects of dividing property, integrates tax issues, and evaluates the client’s insurance needs. They determine whether the client can afford the matrimonial home, and what might be an affordable alternative if not. The CDFA Professional also analyzes pension and retirement plan issues, and establishes assumptions for projecting inflation and rates of return. With all of these factors in mind, they help to bring an innovative and creative approach to settling cases.
Why Hire A Certified Divorce Financial Analyst?
Financial analysis conducted early in the collaborative divorce process can save time. In the beginning stages of the process, both parties tend to spend a great deal of time trying to get a clear understanding of the financial aspects and terminology of the separation. A CDFA Professional can explain all financial aspects of the pending decisions, helping to empower their client to make educated decisions.
A CDFA can help their clients save money during the collaborative divorce process by giving them a clearer view of their financial future. A CDFA Professional can also help their client avoid long-term financial pitfalls related to divorce agreements by forecasting the long-term effects of the divorce settlement, including tax liabilities and benefits. Financial decisions must be made that not only take care of immediate family needs, but retirement needs as well.
CDFA Professionals can assist their clients with developing detailed household budgets to help avoid post-divorce financial struggles. Expenses such as life insurance, health insurance and cost of living increases must be taken into consideration when agreeing on a final financial settlement. Using a CDFA Professional can reduce the amount of apprehension and misunderstanding about the divorce process. Financial divorce analysis helps to ensure a stable economic future and prevent long-term regret with financial decisions made during the divorce process.