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|Your Money's Worth
How to choose and work with financial professionals -- both during and after divorce.
By Diana Shepherd
During and after divorce, many people report that their standard of living decreases -- sometimes significantly. Unless you change your occupation for one with a higher paycheck, you'll have the same amount of income but more and higher expenses: where there once was one, there are probably now two homes, two cars, two sets of furniture, two sets of children's clothes and toys, etc. During your divorce, you need sound financial advice to ensure the settlement is fair to both parties; afterwards, you'll probably need help adjusting to your new circumstances and planning for a secure future. Here's an introduction to some of the financial professionals you may need -- along with some suggestions of how to find and work with them.
Certified Public Accountant
A Certified Public Accountant (CPA) can handle many of the financial aspects of your divorce. His or her responsibility is to calculate your net worth and your spouse's net worth, and to produce figures that are agreeable to both you and the courts. There are a number of accreditations given to accountants, and you'll find these designations after their name. Wading through the differences between someone who is a Certified Fraud Examiner (CFE), or a Board Certified Forensic Examiner (BCFE), or a member of the American Society of Appraisers (ASA), or who has a National Association of Certified Valuation Accreditation (NACVA), may seem a daunting task.
In most cases, you'll be looking for a CPA with practical experience in divorce matters. "Look for someone with good analytical skills and some background in forensic accounting so they will be able to ferret out the details behind what's on the face of the statement,"advises Diane Womack, a CPA, CFE, Certified Valuation Analyst (CVA), and director of the litigation consulting and bankruptcy service at Margolin, Winer, & Evens in Garden City, NY.
Finding an accountant
Usually the best and easiest way to find an accountant is through your lawyer. These two members of your "divorce team" will have to work closely together, so it's best to choose someone your lawyer is familiar with. "A recommendation from a lawyer who is well-respected and well-recognized in the community is a good place to start," says Jerry Lipman, a CPA, ABV, ASA (American Society of Appraisers), and the sole shareholder of Jerome H. Lipman and Company in Chicago. "You could also ask your personal accountant to suggest someone who has a matrimonial background." If you use an accountant to do your taxes, ask him or her to recommend a colleague who has experience with matrimonial law. "Trust your instincts at all times when deciding ... whether to use Accountant 'A' or Accountant 'B'," says Esther M. Berger, a Certified Financial Planner (CFP), the author of MoneySmart Divorce, and managing director of Berger & Associates, an investment advisory company in Beverly Hills. Look for someone honest and forthright, and who offers reasonable economic terms.
Certified Financial Planner
During and after the divorce process, you may need the services of a CFP. "We can help define financial goals and desires, and offer assistance with a broad range of financial planning," says Berger. "This assistance can be with anything from money and risk managment to estate or retirement planning."
The planner can work with an attorney representing one of the parties to help collect, organize, and analyze financial data, calculate long- and short-term needs, and prepare for meetings, hearings, and -- in some cases -- trial. A CFP can reduce the uncertainty about the future by forecasting the economic effects of alternative settlement proposals. For instance, a CFP can tell you what the economic consequences will be of "trading" the house for a pension, or of keeping one asset over another.
A CFP can also help you to adjust to a new fixed-income lifestyle, or assist with post-divorce tax, estate, or retirement planning. His or her job is to help you gain control of your financial future by developing a personalized plan with a time horizon and a solid investment strategy to help you towards financial stability for tomorrow.
After your divorce is final, a CFP can help you to become financially independent by assisting with money management and with long-term planning -- such as the kids' college tuition or your retirement fund.
If possible, interview two or three CFPs before choosing one. Remember, you could be working with this person for years to come, and you want to make sure you'll communicate well and feel comfortable with him or her. When you call to make the appointment, ask if the initial consultation is free. As with an accountant, ask questions about their experience, educational background, credentials, and fee structure.
Certified Divorce Planner
A Certified Divorce Financial Analyst (CDFA) is a relatively new kid on the block. This financial professional -- often also a CFP or a CPA -- has specialized skills and experience that enables him or her to analyze financial issues in divorce in their long-term context. "The divorce financial planner can help people going through divorce feel more secure about the choices they'll eventually make," says Carl M. Palatnik , Ph.D, CFP, CDFA, and a practitioner member and president of the Association of Divorce Financial Planners in private practice in Smithtown, NY. "They'll be more aware of the lifestyle changes they need to adopt to make a particular settlement work, able to reach workable settlements more quickly, and less likely to have to revisit support issues in the future."
Planners who have met specific education and experience requirements have been designated Practitioner Members by the Association of Divorce Financial Planners or Certified Divorce Financial Analysts by the Institute for Certified Divorce Financial Analysts. Both organizations maintain referral services (see "Referral Services").
Questions to ask a financial professional
Once you've set up an initial interview, here are some questions you should ask to make certain you're dealing with a competent professional -- and someone who's right for you:
Remember that once a fee is agreed upon and a contract is signed, any additional fees should be by prior written agreement only. You may want to add this to any contract you sign, if it's not already there.
How to work with them
Use the initial interview to become comfortable with your accountant or planner and to learn what he or she will expect from you during the divorce process.
"This is usually where the accountant will work with the client to determine what they will be doing and what the client will be doing," says Diane Womack. "The accountant will also explain what a lifestyle analysis is and assess what the financial aspects of the case are."
There are several important documents your accountant or planner will need to see:
You'll also need valuations or other paperwork detailing property you and you spouse own together or separately -- from the contents of a safety deposit box to the car to your home. Although you'll be dealing mainly with "big ticket items" here, if something is very important to you, make sure it's on your list. If a business is involved, brokerage statements or corporate minute books will also be required. Basically, your accountant or planner needs to see any major paperwork that involves the transaction of money -- for both you and your spouse.
What do those letters that follow the names of financial experts mean? Here are some common designations:
There are four organizations you can call for a referral to a financial planner practicing in your area.
Finally, the following organization can provide a CFP licensee's date of certification, current status, and any past or current disciplinary actions against the planner by the Board: Certified Financial Planner Board of Standards: (303) 830-7500.
For more articles on financial planning before and after divorce, visit http://www.divorcemag.com/articles/Financial_Planning.
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