“My attorney doesn’t understand the financial aspects of my divorce. What are my options?”
You have several options. You can seek the advice of friends, family, or business associates, but they may have little or no training or expertise in the subject. If you are concerned with tax related issues, you can consult with your Certified Public Accountant (CPA). You can also consult with your Certified Financial Planner (CFP) for financial advice. Input from either or both should be very beneficial in bringing you up to speed on your present financial condition. When it comes to divorce, however, neither professional may be trained in the specific issues which may come up, or in how to work with your attorney, mediator, or collaborative divorce team.
A better alternative would be to hire a Certified Divorce Financial Analyst (CDFA™) who has taken the advanced training required to deal with the specific financial issues related to divorce. Ideally, that person should also be a Certified Financial Planner (CFP®) or Certified Public Accountant (CPA) with specific knowledge and experience in their related fields of expertise. A CDFA’s training and experience in the divorce field will help you avoid many of the typical mistakes that are seen in divorce settlements, and ones that can have long-term consequences. A relatively common property division is where the woman keeps the home and the man keeps his pension plan. If the equity in the home is equal to the value of the Pension Plan, this appears to be a fair arrangement. In reality, however, it is not an optimal solution for either party. In most cases if the woman does not work (and many times even if she does), she does not have the resources to refinance the home and get the husband’s name off the title. She may not be able to afford the increased mortgage, or at best could end up “house poor.” The Pension Plan may not be in the best investment for the husband, either, as it may provide only a fixed payment at retirement without any indexing. They both may be better off selling the home and splitting the proceeds (which generally will be tax free), then splitting the pension so they each will have at least a basic retirement benefit for their future. Both parties would end up with cash to invest in another home or alternative investment that should have the opportunity to grow at a faster rate than inflation. This is just one example of how a CDFA™, by looking at the big picture instead of the simplest settlement, can prove invaluable to a client’s case.
Regardless of whether you are pursuing a litigated, mediated, or collaborative divorce, a CDFA™ has the experience and training to help you get the best possible settlement and understand what the financial future will hold for you after your case is resolved.
Paul J. Toohey is a Certified Financial Planner CFP® and, Certified Divorce Financial Analyst CDFA™. He is a member of Collaborative Divorce Solutions, a Collaborative Divorce Group located in Orange County, California.