Many divorcing couples would answer ‘no’ if they were asked if they should hire a financial analyst. After all, the assets of the average couple aren’t extraordinary, and the cost of a divorce is high enough without hiring people unnecessarily. Besides, don’t the lawyers help value and divide assets? No, in most cases the lawyers lack the training, knowledge and expertise to competently analyze the couple’s finances. Even if a lawyer is versed in finance, there are other, equally important reasons why it pays to hire a certified divorce financial analyst (CDFA).
Saves Time and Money
In the early part of the proceedings, much time is spent grappling with the financial components of the divorce. Since most lawyers aren’t equipped to competently manage the minutiae of the couple’s assets, a CDFA can step in and handle every aspect of the finances. This saves time and frustration, and the CDFA can provide the divorcing couple with a complete analysis of their assets. Since the services of a CDFA cost significantly less than those of a divorce lawyer, it can also save money.
Plan for the Future
A substantial part of the discussion surrounding asset division will revolve around the financial future of both parties. By studying the proposed division of the couple’s assets, a CDFA can perform an objective analysis, and project how such a division would impact future spending and lifestyle choices for both parties. That information can be critical to the way joint assets end up being divided. Once a final division has been determined, the CDFA can then help with post-divorce financial planning.
Plan for Taxes
Another important role of a CDFA is that of a tax advisor. When the divorcing couple is discussing how the marital property should be split, a CDFA can explain the tax implications of selling, dividing and holding onto specific assets. However, while a CDFA can advise a couple on divorce-related tax matters, he may not be an expert in other tax areas.
Even if a divorcing couple doesn’t want to hire a CDFA, it can still pay to consult one. A CDFA can provide the answers to important questions that can help the couple decide on their own how to divide their marital assets. Prior to a one-time consultation, make a list of any general finance-related questions you need answered. Sample questions might include the following:
- What is ‘individual property’, and what is ‘joint property’?
- What are the long term financial implications of certain decisions?
- How are pensions and retirement funds split?
- Should you keep the house or sell it?
- How is joint property valued?
Find Hidden Assets
In some marriages, one spouse is primarily responsible for the family’s finances. In that scenario, when the couple decides to divorce, the other spouse may feel left in the dark, and concerned there may be assets he or she doesn’t know about. Much like a forensic accountant, a CDFA can help identify hidden assets.
A certified divorce financial analyst can assist divorcing couples with myriad financial-related issues, so the earlier in the proceedings a CDFA is brought in, the better. Working with a CDFA helps ensure financial transparency, accuracy and equity in the divorce process. Most divorcing couples, regardless of the value of their assets, would benefit from consulting a CDFA.Go to Article