What is a Certified Divorce Financial Analyst™ (CDFA™)?
A CDFA is a financial professional – often also a financial planner or an accountant – who has specialized skills and experience that enables him or her to analyze the long-term financial impact of divorce. Financial professionals who have met specific education and experience requirements have been designated CDFA professionals by the Institute of Divorce Financial Analysts™ (IDFA™).
CDFAs receive special training in divorce-related financial issues such as tax and property division. After completing the IDFA training and passing the exams, CDFAs also receive special software enabling them to produce charts and graphs that will show a client the results of choosing one scenario over another. A CDFA can take the offer on the table and project out 5, 10, 20 years to show you what you’ll have to live on if you sign the agreement. If the projections show that you’re going to run out of money after 18 months, you’ll need to renegotiate your agreement. That’s why it’s so important to meet with a CDFA before you sign your agreement. If this advice comes too late for you, meeting with a CDFA could still be worthwhile: he or she can look at your financial situation and show you how to improve it by making some spending/saving changes.
How a CDFA professional can help divorcing individuals
The financial ramifications of a divorce can be devastating. But, with proper planning and expert help from professionals specializing in financially equitable divorce settlements, you can increase your chances of arriving at a settlement that fully addresses your long-term financial needs — and your spouses too. What’s missing in most divorce processes is financial expertise. A Certified Divorce Financial Analyst® (CDFA™) professional can forecast the long-term effects of the settlement. By using a CDFA professional, both partners have a clearer view of their financial futures. Only then can they approach a settlement that fully addresses the financial needs and capabilities of each. To learn more about how a CDFA professional can help you plot your financial future with Divorce Settlement Analyst™ software, read the case example that follows.
Who do CDFAs help?
CDFA professional’s help clients determine the short-term and long-term financial impact of any proposed divorce settlement. They also provide valuable information on financial issues that are related to the divorce, such as tax consequences, dividing pension plans, continued health care coverage, stock option elections and much more. CDFA professional’s also help attorneys by helping the client make financial sense of proposals. CDFA professional’s give lawyers the tools they need to help prove their case.
Top 5 reasons to hire a CDFA
1) Financial analysis conducted early in the divorce process can save time.
The average length of the U.S. divorce process is one year. In the beginning stages of the process, both parties spend a great deal of time trying to get a clear understanding of the financial aspects and terminology of the separation. A Certified Divorce Financial Analyst® (CDFA™) professional can explain all financial aspects of the pending decisions and help to empower their client to make educated decisions throughout the proceedings.
2) A CDFA can help their client save money during the divorce process.
By using a CDFA professional, you can have a clearer view of your financial future. Only then can you approach a legal settlement that fully addresses your financial needs and capabilities. A legal settlement that floats back and forth between attorneys, without the client having a clear understanding of all financial ramifications, can be detrimental, time consuming and expensive. CDFA professional’s can educate their clients by providing a thorough knowledge and understanding of the often-complicated financial decisions.
3) A CDFA can help his/her clients to avoid long-term financial pitfalls related to divorce agreements.
Working with a client and their attorney, a CDFA professional can forecast the long-term effects of the divorce settlement. This includes details of all tax liabilities and benefits. Developing a long-term forecast for their financial situation is far better than a short-term snapshot. Financial decisions must be made that not only take care of immediate family needs, but retirement needs as well.
4) CDFA professional’s can assist their clients with developing detailed household budgets to help avoid post-divorce financial struggles.
A CDFA professional can help clients think through what the divorce will really cost in the long run and develop a realistic monthly budget during the financial analysis process. Expenses such as life insurance, health insurance and cost of living increases must be taken into consideration when agreeing on a final financial settlement.
5) Using a CDFA professional can reduce the amount of apprehension and misunderstanding about the divorce process.
Misinformation and misconceptions about the divorce process can be detrimental. Many have false expectations that they will be able to secure a divorce settlement allowing them to continue with their accustomed style of living. Financial divorce analysis helps to ensure a good, stable economic future and prevent long-term regret with financial decisions made during the divorce process.