Financial planning is a fundamental part of the divorce process, one which can be overwhelming to navigate without guidance from a professional in the field.
Members of the nonprofit Association of Divorce Financial Planners (ADFP) and Institute for Divorce Financial Analysts (IDFA) can provide the expertise required. This includes analyzing current and projected financial needs to calculating potential child support and alimony expenses. Evaluating taxes associated with shared assets and developing options are other services critical to implementing an optimal post-divorce financial agreement for both parties.
Financial Guidance Is Key
ADFP was founded in 1998 by a group of certified financial planners specializing in divorce-related issues. This membership-based group prides itself on unifying the divorce financial planning profession through setting and enforcing standards across the field. The IDFA, formed in 1993, trains professionals applying the financial planning discipline to divorce settlements. It has certified more than 5,000 individuals throughout the United States and Canada.
By making financial planning such a vital aspect of the divorce process, these organizations and their members focus on the issues associated with this important life transition. Services are fee-only, and do not involve the sale of products, insurance transactions, or investment advice; rather, the primary objective is to channel interdisciplinary knowledge of tax and divorce laws into sound advice designed to guide those in the midst of divorce or separation.
Given the stark increase in incidences of “gray divorce” over the last decade, and the complex economic partnerships it often entails, the need for careful financial planning and increased specialization in divorce matters has become paramount.
To join these organizations, financial practitioners are advised to obtain Certified Divorce Financial Analyst (CDFA) designations, in addition to their accreditations/licenses. Those eligible for CDFA certification include financial analysts with a bachelor’s degree and three years of experience in either financial services or matrimonial law. Completion of a certification exam, and periodic renewal, is required.
Evaluating & Dividing Assets
When it comes to divorce, one of the most daunting tasks is the process of dividing assets—both tangible and financial. By employing a CDFA trained in the fundamentals of divorce and finance, you can receive much-needed guidance in achieving a fair and equitable settlement.
A neutral specialist is ideal, both for cost-effectiveness (one CDFA versus two) and full transparency in meeting the particular needs of a divorcing couple. The initial process can begin without attorneys present, saving additional hourly expenses, as well. This typically involves the gathering of financial information from both parties in order to understand the situation and properly equip the CDFA with the resources needed to objectively discuss and work through any concerns.
Personal, business, and tax issues will be analyzed, as well as any other particular assets applicable to the situation, followed by a recommendation as to the best course of action moving forward.
Divorce is a difficult process, one which can be made far easier by enlisting the assistance of professionals trained to guide you through each stage.
Gregory C. Frank is the CEO and Founder of DivorceForce.