Why a CDFA® can be your most powerful tool in a divorce
By As a Certified Divorce Financial Analyst® here in Lexington, Kentucky, I’ve worked with my fair share of clients who understandably have lots of questions about what to expect when it comes to splitting up assets with an ex-spouse. It’s never as simple as: half of your cash, half of your house, half of your cars. It’s a complex process that, when done correctly, requires a lot of foresight to make sure you don’t end up with an unfair settlement that haunts you long after a divorce is finalized.
Asset gathering
An early step in reaching a divorce settlement is meeting with a divorce attorney and going through a discovery of all your assets. Both parties are required to provide accurate information, including retirement accounts, bank statements, debt — everything in your names comes to the table.
Some spouses still try to hide assets, so make sure you’re following any money flowing to unknown accounts. A CDFA can be a big help for flagging transactions that might indicate a hidden asset somewhere.
Asset splitting
Not all assets are created equal. Splitting up retirement assets can be a real pain. Your 401(k)s and 403(b)s are required to be split via a Qualified Domestic Relations Order. A judge will order retirement accounts to be split a certain way, and you have to turn that judgment in to your plan administrator.
This is important: It is recommended that you get that signed at the time of your divorce. Too many people end up having to hunt down the ex-spouse because they need a signature, and you do not want to be in the position of having to chase somebody who likely wants nothing to do with you. Use an attorney or, better yet, a CDFA to get that paperwork finalized during the divorce process.
Asset forecasting
This is an area where a CDFA can have the most long-term impact on your finances. Someone like me is properly trained to sit down with you and think about things like future car payments, health insurance costs, new expenses as a single person, etc. Accurately forecasting your future budget is crucial to providing the judge with information that will help determine asset splits, alimony, and child support.
Asset updating
Once your divorce is finalized, you’ll want to make sure your remaining assets are titled correctly and have up to date beneficiaries. This will make your life so much easier, especially if you happen to remarry, have more children, etc.
The emotions of a divorce can make it incredibly difficult to see your whole financial picture clearly. Using an experienced CDFA, alongside your divorce attorney, can save you a lot of headaches. If you would like to talk with me about how to navigate this process, reach out today.
Article by Jacob Buckley, CFDA, MBA, Wealth Advisor at Family Financial Partners — a financial services firm in Lexington, Kentucky.