Divorce Financial Planning:
Make informed decisions to get what you deserve
What is a CDFA®?
A Certified Divorce Financial Analyst® (CDFA®) helps clients and their attorneys understand how financial decisions made during a divorce will impact the client’s future. They become part of the divorce team, providing guidance on key financial matters like property division, tax implications, retirement plans, the affordability of the marital home, and insurance needs. With expertise in divorce-related financial issues, these specialists prepare data to show the financial outcomes of different settlement options. They also work with clients to gather financial data for the divorce financial affidavit and help prepare clients for their new future by setting goals, creating budgets, and planning for retirement.
Why should I work with a CDFA® while going through a divorce?
People often seek help from financial experts to navigate the complexities of divorce settlements. Because of the financial challenges involved and the importance of reaching a fair agreement, hiring a Certified Divorce Financial Analysts® early in the process is important. Pre-divorce financial guidance from a CDFA® helps ensure that everyone understands the settlement clearly, leading to more informed and fair outcomes.
Most individuals aren't familiar with complex financial issues like taxes, cost-basis of assets, and retirement plans. A financial expert, such as a CDFA®, can help avoid costly mistakes by ensuring both parties understand the tax implications of property transfers, accurately value marital and separate assets, and properly divide pensions and retirement accounts. This expertise can help both parties reach a fair and informed settlement, preventing future financial complications.
What are the different approaches to settlement in which a CDFA® can support me?
A Certified Divorce Financial Analyst® can assist clients through various divorce processes by providing financial expertise and ensuring that settlements are fair and sustainable. At Pathways Financial Planning, our CDFA® professionals have additional training in the collaborative divorce process, which allows them to act as a financial neutral in these types of divorces. Regardless of the settlement option, a CDFA® plays a key role by offering specialized financial expertise that complements the legal and emotional aspects of divorce, ensuring both parties reach a fair, financially-sound outcome.
Click on the arrows below to learn more about each approach.
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In mediation, both spouses work with a neutral mediator to reach a settlement. This can decrease costs compared to other methods, and studies show individuals are more likely to adhere to decisions made through the mediation process as opposed to judgements passed down through arbitration or court.
A CDFA® supports this process by providing unbiased financial analysis and offering solutions for dividing assets, pensions, and calculating child or spousal support. Their expertise helps clarify the financial implications of different options, leading to an informed and fair agreement.
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This option is a team approach to divorce as the couple seeks expert help in the legal, financial, and mental health fields with the objective of settling out of court.
The main role of both lawyers is to assist in resolving the dispute. All members of the team agree to cooperate respectfully and truthfully to find solutions that benefit both parties. No one is allowed to go to court or even mention the possibility of doing so. If someone does, the collaborative divorce process stops, and all professionals involved can no longer participate in the case.
A financial neutral is part of the collaborative team, providing financial insights to help both parties understand the impact of decisions like property division or retirement planning. The financial expert’s goal is to find win-win financial solutions that benefit both parties and avoid litigation.
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Typically, each spouse hires their own attorney, and the issues are resolved through different methods: by sending settlement letters between the lawyers, having meetings between the two lawyers, or holding four-way meetings that include both lawyers and both spouses.
In both lawyer-directed, and pro se divorce, where one or both parties do not have legal representation, a CDFA® can provide independent financial analysis and guidance. They help their client understand the division of assets as well as tax implications, so clients can make decisions that benefit themselves in the short and the long-term.
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In arbitration, a neutral arbitrator makes the final settlement decisions. This option is beneficial when a couple is unable to make a decision on their own yet would like to avoid the costly (and public) route of going to court.
A CDFA® can provide critical financial data and analysis to help the arbitrator make informed rulings on asset division, support payments, and other financial matters, ensuring the final settlement is equitable.
After the divorce is finalized, how can Pathways Financial Planning support my financial future?
There is a conflict of interest in offering both financial planning and CDFA® services to the same client during a divorce. However, once the divorce is finalized, we can seamlessly transition to working together in a new capacity as your CERTIFIED FINANCIAL PLANNER™ and expert in holistic financial planning. Many clients choose to continue working with the same planner after divorce because this professional is already familiar with their needs and financial circumstances. Given the disruption that divorce can cause, maintaining a trusting relationship with someone who understands their situation offers a sense of stability.
See the other services provided by Pathways to decide if you’d like to engage in hourly planning as needed, or if you’d like to be a continual client receiving ongoing support each year.
