If you’re going through a divorce, you may have heard someone mention working with a Certified Divorce Financial Analyst® and wondered why you should use a CDFA® for your divorce. Since most of the mediators at West Coast Family Mediation Center are also CDFAs®, we understand that many people going through a divorce don’t know what they should use.
First off, a CDFA® is certified through the Institute for Divorce Financial Analysts (IDFA) which is the premier national organization dedicated to the certification, education, and promotion of the use of financial professionals in the divorce arena. While our mediators are working as your mediator and can’t also be your CDFA® we know the importance of using a CDFA® in your divorce and we are able to make referrals to those that can help you through the divorce process.
What is a Certified Divorce Financial Analyst®?
The main role of a CDFA® is to help the client(s) and their mediator and possibly attorneys to understand how the financial decisions they make today will impact their client’s financial future. Now clients can choose to work with one individual and that person is going to be able to advise them on different financial situations and provide reports and recommendations, or you and your spouse can choose to hire a neutral CDFA® that can work with both of you and your mediator as a neutral third party, similar to your mediator. No matter which way you choose to work with them it’s important to let your mediator know so that they can work collaboratively with your CDFA® and sometimes you may even choose to have them attend mediation meetings to assist with the process.
All CDFAs® are going to be familiar with the legal issues, tax issues, and other financial issues that come up in a divorce. You may be thinking that your finances are fairly simple, and you don’t need to work with someone, however, there are many ways that a Certified Divorce Financial Analyst® can help you throughout the process. Some of those are as follows:
A Certified Divorce Financial Analyst® can help you strategize to understand what your actual financial needs are and how you may be able to meet those needs. They can be helpful both before and during the actual case. Additionally, if you, unfortunately, end up in court, they can sometimes provide expert witnesses if needed.
Of course, a Certified Divorce Financial Analyst® is there to review and provide input regarding your investment accounts, your retirement accounts, benefit programs, business records, tax returns, and other financial data. Since you are already required to disclose all your financial data in your preliminary declarations of disclosure your mediator is able to share all of this information directly with your CDFA® so you don’t have to do the work twice.
That being said another role that your Certified Divorce Financial Analyst® can take on is to help you collect all of the financial data and understand what you need to provide.
One of the biggest areas that I find a Certified Divorce Financial Analyst® can be helpful in your divorce is by helping you budget and really understand how much you spent during your marriage and what you expect to spend after. This is important to really understand what your cash flow will look like and what you may need in support to make this work. They can also help you figure out where you may need to cut back if there is not enough money to spend as you may have during the marriage.
Once your Certified Divorce Financial Analyst® helps you with your budget then they can also be helpful to discuss how much you should be asking or paying for in child and/or spousal support. While your mediator will review the child support guidelines with you and discuss the legal pieces of spousal support (or alimony as you might hear it called) working with a CDFA® to understand what your needs are and what support may look like and even set the clients expectations can be very helpful in the mediation.
If you or your spouse have RSUs, Stock Options, ISOs, or other equity compensation from an employer that is on a vesting schedule you’ll want to work with a Certified Divorce Financial Analyst® so that they can help calculate how much is community versus separate property. There are different formulas to use to calculate how much of equity that you would be entitled to. Additionally, if the company is publicly traded then a Certified Divorce Financial Analyst® can make a recommendation on the value of them so in mediation you and your spouse can determine whether the one with the equity is going to buy out the other’s interest or divide the actual equity.
Division of Assets & Debts
Sometimes dividing your assets and debts can seem very easy and other times in can be very complicated. The term property is used to refer to all assets and debts, not just real property, which I know can be confusing but there are two types of property that we refer to, community property (during the marriage) or separate property (from before the marriage, after the date of separation or gift or inheritance during the marriage). Anything that is community property can be split 50/50 upon divorce, however, it doesn’t always make sense to divide every asset or debt right down the middle and there can be very different tax consequences for different assets (that’s another blog).
Using a Certified Divorce Financial Analyst® for your divorce can help you better understand how to divide the assets and debts that you have and what might be community versus separate property. Speak with one of our mediators today!
by: Amanda Singer