Divorce isn’t simple. You’ve spent a period of time tied emotionally and financially to another person.
Even if you think you’ve kept finances separate, there are laws and divorce negotiations that may have financial implications. That’s where hiring a Certified Financial Analyst® (CDFA®) can ease the burden.
As a CDFA, I work with clients and their attorneys to analyze the long-term and short-term financial implications of divorce.
Why Hire a Certified Divorce Financial Analyst?
According to The Institute for Divorce Financial Analysts™ (IDFA™), it takes an average of a year for a divorce to be settled, leaving lots of financial questions needing to be answered.
Among the most commonly asked questions is how a credit score is impacted by divorce.
The simple answer is that credit scores aren’t tied together even when you’re married so they don’t matter if you’re divorced. They are, however, impacted by the choices you and your spouse make as you’re dissolving the marriage. Maxing out credit cards, making expensive purchases on shared credit, and not paying joint accounts will impact your credit and that of your spouse. Even if you didn’t make the purchases, if your spouse isn’t at least making minimum payments, you need to be to preserve your own credit score. Is it fair? No, but you’re only hurting yourself if you don’t keep accounts current.
From a financial perspective, these types of decisions impact cash flow for you, your spouse, and your children today and in the future.
The benefit of working through issues like shared debt is that your CDFA has your interests in mind. It’s our job to get the best settlement we can for you.
Other questions a CDFA can answer include:
- How do we divide household bills and child costs while in divorce proceedings?
- Does your spouse have the right to claim a portion of your 401k retirement savings?
- If you’re receiving a 401k payout upon the finalization of the divorce, should it be invested? Where should it be invested?
- You and your spouse have the same financial advisor. Do you need to find a new one now that you’re divorcing?
- If you’re receiving a cash payout, what should be done with that?
- What happens to the family home where the minor children are being raised? Can you afford it without financial help from your spouse? Does it make sense to downsize?
- Who is responsible for debts incurred during the marriage? During divorce proceedings?
- Is inheritance money considered part of marital assets and if so, how is it divided?
- What are tax implications, if any, of child support and alimony payments?
- What happens to your shared non-retirement investment account?
- How are the proceeds of the sale of real estate divided? Should the funds received be invested in real estate or can they be used for retirement savings?
- What if we own real estate in more than one state?
- What is the cost of health insurance now that I am divorced? Can I afford it?
- What happens to your financial stake in your spouse’s business?
- When should you update beneficiaries on investment and insurance accounts?
While many of these can be answered after I complete a financial analysis, some questions may need to be answered in conjunction with your attorney as there are laws about how assets and debts are divided during divorce. That’s why it’s good to have us both on your team. We can plan the best strategy to get you what you need.
While I may handle the financial aspect of the settlement, events like the Second Saturday Divorce Workshop provide unbiased information to help you understand your options, deal with emotions, and move ahead. We explore the legal, financial, psychological, and social issues of divorce while sharing community resources.
Divorce isn’t a simple process. You need to hire a CDFA to protect your assets and develop a financial plan that supports you in your new life.
A version of this article appears on the Heritage Financial Strategies blog – New Service for Divorcing Couples in Gilbert and Scottsdale.