Filing for divorce is one of the most gut-wrenching feelings you can experience. You are taking a huge step forward in your life regardless of the events that lead up to this moment. The end of anything, especially something as important as a marriage, can be a tough emotional experience. However, when you decide to move forward it is important for you do so with a clear, emotionless, and logical thought process. I know that is a lot to ask, but when you bring emotions into the divorce proceedings, the entire process can become harder and potentially more expensive. Therefore, it is vital to understand which experts you should have on your ‘divorce team’. Whenever possible, we advise clients to make sure they have the right professionals in place to facilitate their needs. Doing this can help make the divorce process more straightforward. In this article we will discuss the different types of divorce consultants you should consider hiring before filing for divorce.
The divorce process can be lengthy, arduous, and seem (at times) never-ending. Many of the decisions that need to be made come down to how financial assets will be divided, what support will be paid, and (when applicable) custody and visitation rights of any minor children. In order to understand the financial impact of divorce a client may turn to their attorney to guide them through the tough decisions. While many attorneys are very passionate about helping their clients, their professional knowledge is primarily in regard to legal interpretation, not necessarily in financial matters. To this end, we strongly encourage clients to use an independent third party when assessing the financial impact of divorce. Let’s discuss the differences between divorce consultants:
A licensed attorney is a highly educated professional. This is a person who has completed many difficult and comprehensive steps in the journey from obtaining an undergraduate degree all the way through passing the LSATs entrance exam, graduating from law school, and (depending on the state) passing the Bar exam. The Bar exam allows an attorney to practice law in a particular state. An attorney who has passed the Bar exam is required to take continuing legal education credits. Through all of these educational and licensing requirements, you no doubt have an attorney who is knowledgable in their field and highly capable. However, as with any field of study, your attorney has expertise in a particular subset of the law, and this expertise does not necessarily make them proficient in all legal or financial matters. This poses three questions:
- How fluent is your attorney in financial management and affairs?
- Can your attorney appropriately represent their clients on financial matters if their expertise pertains to legal matters?
- What is their success rate for winning divorce cases where significant financial assets are being negotiated?
Can anyone be considered a ‘divorce planner’ if their work relates to divorce? Mediators, therapists, arbitrators, and other related divorce professionals may call themselves divorce planners. By marketing themselves as ‘helping individuals with divorce concepts or strategies’, they can latch on to this term. Unfortunately, labelling themselves as divorce planners may be confusing to clients, especially if they attempt to provide financial guidance. This leads to two questions:
- What qualifications do these individuals have to assist clients with divorce proceedings?
- How do they specifically help the client evaluate and forecast the financial impact of different settlement options?
Financial Advisor or Financial Planner:
The two previously discussed professionals can be valuable resources in the divorce process when utilized for the correct purpose. The same can be said of a financial advisor, or planner. In most cases, when a client works with a financial professional they are expecting to be provided with insight with respect to what they should do with their financial assets. Two concerns can arise here:
- If the financial professional worked with both spouses prior to the divorce proceedings, then there may be a conflict of interest. Helping one person with divorce questions while representing both individuals as an advisor is unethical.
- Is the at financial professional trained to guide clients through divorce discussions with the divorce attorney, run projections for life after divorce, act as an expert witness, or simply to assist the client and attorney with financial decisions associated with settlement options?
CERTIFIED DIVORCE FINANCIAL ANALYST® (CDFA®)
There is one professional designation that consolidates all of the above mentioned descriptions. This professional title bridges the gap between the legal and financial advice needed to appropriately advise a client through their divorce. The CERTIFIED DIVORCE FINANCIAL ANALYST® designation, originally termed the Certified Divorce Planner, was created to help clients understand the financial impact of divorcing. A CDFA® can answers questions including, but not limited to:
- Completing detailed financial projections for different settlement options.
- Discussing how the nuances of spousal support vs child support can affect a client’s tax situation.
- Analyzing the impact of dividing current assets and guaranteed income on a divorcee’s retirement.
- Evaluating the cash flow impact of taking over the primary residence against saving for other goals.
It is important to note that the CDFA® has limits. First, the divorce analyst is not an attorney and cannot provide any legal advice. While they know many legal concepts and can relay information between the client and the attorney, they are not able to provide legal opinion. Second, the divorce analyst is not a therapist. They are not able to appropriately counsel a client through the emotional stress of a divorce. We strongly encourage clients to receive the appropriate support from the necessary qualified professionals.
A ‘divorce team’ can consist of many members, each assigned to different tasks. To this end, anyone can call themselves a divorce consultant. However, it is up to the client to learn about each consultant’s qualifications. Only after learning about a professional’s background, educational certifications, and ongoing training, can a client appropriately find the correct help.
Content in this material is for generation information only and not intended to provide specific recommendations, tax, or legal advice for any individual.
To be considered for the Certified Divorce Financial Analyst (CDFA®) designation, a professional must have at least two years’ experience in the financial or legal industry and must complete a series of four examinations based upon material learned from four self- study courses. Coursework outlines several key areas important in divorce proceedings, including the treatment of property during divorce, alimony and child support, and tax implications of property division. The entire program generally takes at least 4 months to complete.