Finding the right divorce attorney is critical, but if you and your soon to be ex-spouse have accumulated assets during your marriage, hiring a third party financial expert, like a certified divorce financial analyst, can be just as important. Whether you are participating in collaborative divorce, mediation, or litigation, a CDFA can help you prepare and negotiate your financial case — and save money in the process.
If you have been less active than your spouse in managing your finances, a CDFA can help level the playing field by making sure you understand all of your marital assets and liabilities. The first step will be to compile a comprehensive a list of your assets and debts. Often, this is one of the most time consuming parts of the divorce process.
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You and your spouse can reduce the cost of your divorce by working jointly with a neutral financial analyst, rather than paying your lawyers individually for this service. If your divorce is contentious, a CDFA can be one of your strongest advocates in the financial negotiation process. You may be leaving significant money on the table if you aren’t working with an expert trained to identify and plan for your long term needs.
The next step will be to analyze the incomes and expenses of each party, and forecast what expenses might be after the divorce is finalized. Your CDFA can help you plan for future cash flow needs you may not have thought to include in your financial negotiations, such as expenses associated with training for a new career.
Your CDFA will help you keep your long term best interest in mind when negotiating child support and spousal support. Oftentimes, divorcing spouse and their attorneys are focused on getting as much cash out of their spouse as possible on a monthly basis. However, if you have the means to support yourself and your children with less support from your ex, it may be in your best interest to forego some monthly support in favor of a larger share of investment assets or retirement benefits.
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Many couples find that their largest assets are retirement accounts and pension plans. Your financial analyst can assist you by modeling how different divisions of these assets will impact you and your spouse decades into the future. This modeling will reflect future income from current retirement accounts, and your potential to accumulate additional retirement savings based on your age and earning potential.
There are two asset categories in which a win isn’t always a victory: the family home and investment assets.
Many times, divorcing spouses spend significant time and money fighting over who gets to keep their home. A CDFA can help you determine whether keeping this asset might be more of a drain than you imagine. Maintenance as your home gets older, and rising property taxes may be bigger liabilities than you expect. Depending on your mortgage balance and market conditions, it could be in your best interest to sell now rather than later.
When it comes to investments, sometimes large balances are camouflaging big tax bills to come. A CDFA can determine the most equitable division of investment assets based on the principal amount and when the assets were purchased. With the help of a financial expert, you may actually come out ahead by negotiating to keep assets with smaller face value.
The key to successfully negotiating the financial aspects of your divorce is having a clear view of the big picture. By looking at assets and liabilities with your long term needs in mind, a certified divorce financial analyst will help you hone in on what is truly in your best interest.
Cathy DeWitt Dunn is a financial services professional specializing in helping people take control of their money to attain long-term financial security. She is the driving force behind Annuity Watch USA and Women Money & Power––education and resources websites designed to help consumers take control of their financial future.
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