Help With the Financial Side of Divorce
Going through a divorce is stressful. Worrying about money makes it more so. Dealing with your finances is something many people don’t like to do during the best of times. The good news is that figuring out the financial implications of your divorce is not something you have to do alone. No matter where you are in the process, it helps to have someone on your side who can answer your financial questions.
But when is the right time to reach out for help and who should you ask?
Before Starting the Divorce Process
This is a great time to reach out. You may avoid thinking about getting divorced because you are worried that you can’t afford to live apart. You may not understand how a divorce would impact your finances and you may not feel like you understand how the financial pieces of the process work. Talking to your friends may not yield helpful information because everyone’s situation is different, and your friends who’ve gone through it may not talk about the money details.
Some questions you may need answered during this time are:
How much does it cost to get a divorce?
What do I need to know and what documents do I need to gather?
Will I have enough to live on now and in the future?
How does child support and spousal support work in my state?
During Mediation or Working with a Divorce Attorney
One of the first items other professionals like mediators and attorneys assign is for you to provide financial information and fill out a lot of forms. They need to know a lot about your finances to do their job. It will go more smoothly if you can have the data ready and if you know your situation ahead of time. They are there to apply the laws and guidelines of your state to move your divorce along, and they will ask you what you want to get out of the process.
Some questions you may need answered during this time are:
Is my estimated budget realistic?
Can I afford to keep the house? What will it cost to buy out my spouse?
How will spousal support affect my taxes? What about child support?
Who should take the tax deduction for our kids?
What is the current value of my future expected pension?
How can we divide a retirement plan?
Can unvested stock options be part of my divorce settlement?
Getting help will allow you to answer their questions completely and accurately. This will save you money and time going forward.
When You Are Considering Divorce Settlement Options
You may find yourself in the situation where you have been offered a settlement and you don’t know what the implications of it are. You may not understand whether it’s better to split some assets equally or negotiate for something different. You may not be sure if the support being offered will allow you to maintain your lifestyle now and into the future. You may want to know if there are more creative ideas to allow you to stay in your home for a period of time.
Some questions you may need answered during this time are:
What are the implications of trading one kind of asset for another?
What are the benefits to taking a lump sum for spousal support v. monthly payments?
Which settlement option will streamline my finances instead of making them more complicated?
Which of two settlement proposals is best for me financially, in the long term?
How will fighting for what I want impact my finances?
After Your Divorce is Final
This situation is one of the most important times to seek support. Often, you need assistance making sure that the terms of your settlement are understood and followed by both parties. It can be hard to make sure all the details are understood when splitting accounts, transferring assets, and making sure you can afford your new life. You may not have been the one who handled the finances in your marriage and you may want to know the best way to prioritize paying bills, paying down debt, saving for medium term goals, and planning for your long-term financial security.
Some questions you may need answered during this time are:
How do I go about transferring assets and splitting accounts?
Do I need to wait for additional paperwork to be completed (such as a Qualified Domestic Relations Order, or QDRO)?
Who is responsible for making sure these items are completed?
How do I know if beneficiaries have been changed?
How do I confirm that my name is removed from accounts?
Who Can Help Me?
If you are uncertain about any of these questions and the financial aspects of your divorce, you may want to seek the help of a Certified Divorce Financial Analyst (CDFA™). Setting a realistic budget and understanding the tax and investment details before your divorce is finalized will allow you to start off on the right foot financially. A CDFA™ can work with you to answer your questions and project the financial implications of your divorce, while your attorney focuses on the legal issues.
What is a CDFA™?
Certified Divorce Financial Analysts™(CDFA™s) have specialized training to work with divorcing spouses to reach equitable settlements. Applicants for the CDFA™ designation must also have a recognized financial planning or accounting designation to qualify for the training. CDFA™s are governed by the Institute for Divorce Financial Analysts Code of Ethics and Professional Responsibility.
A CDFA™ reviews the financial issues, considers the division of assets, and projects the short-term and long-term financial impact of a proposed divorce settlement. A divorce financial professional will use specialized software to gather and analyze your financial data, including property, assets, incomes, expenses, pensions, tax issues, spousal and child support, inflation, cost of living, life insurance, health insurance, and retirement.
Why Work with a CDFA™?
Working with a Certified Divorce Financial Analyst may save you time and money. The midst of a divorce may not be the best time to spend a lot of time learning new financial concepts and terminology. A CDFA™ can explain the financial aspects of the process, empowering you to make educated decisions. Your attorney’s area of expertise is the law, rather than financial issues such as budgets, insurance or planning for retirement. (Your attorney may also be more expensive on an hourly basis.)
But the more important reason is to help achieve better outcomes and fewer financial regrets from the divorce process. Divorce settlements can have unintended financial consequences, and a financial specialist can help identify them ahead of time, so there are fewer financial surprises during and after the divorce.
This in turn can help reduce post-divorce struggles, and generally reduce the amount of stress and misunderstanding in the process.
If you are uncertain about the financial aspects of your divorce, Cultivating Wealth has several CDFA™ professionals who can help. Schedule a complimentary consultation with one here.
Your attorney or mediator may also be able to recommend someone, or you can find one at the Institute for Divorce Financial Analysts website.