What is a CDFA®?
Anyone familiar with divorce knows how emotionally challenging it can be. On top of the emotional challenges, all the financial factors that need to be considered and evaluated add a lot of stress. After witnessing a few close friends go through this process, I decided to become a Certified Divorce Financial Analyst (CDFA®). With this credential and my financial planning background, I can better help alleviate some of the financial stress and uncertainty that comes with divorce.
So, what exactly is a CDFA®? It’s a professional who is trained to provide financial information and assistance to people going through a divorce by helping evaluate the following:
- Tax implications
- Property division
- Short- and long-term financial impact of various settlement options for dividing marital assets
- Settlement options for dividing pensions and qualified retirement plans
- Settlement options for any jointly owned businesses
- Child and spousal support payments
The CDFA® provides their client’s lawyer with data to help strengthen their case or works as the financial expert on a team in a collaborative divorce. My role as a CDFA® is to help people avoid common financial pitfalls of divorce, by offering valuable insight into the pros and cons of different settlement options.
My clients often ask why they’d need a CDFA® if they already have an attorney. It’s always beneficial to have an attorney involved in the divorce process to give legal guidance and advice, but why would you need a CDFA®? Attorneys specialize in law, not finance. While attorneys know what needs to be done from the legal perspective, they don’t necessarily have the background and training to understand tax implications and how to model the differences in the short- and long-term outcomes of various settlement options. Other experts, like CPAs, can provide some financial perspective, but CPAs tend to focus on short-term tax implications, neglecting longer-term outcomes. A CDFA® will make sure your interests are covered for both the short- and long-term.
How do you know if you need a CDFA®? There’s not a cut and dry answer to this question, but we recommend considering a CDFA® when the marital estate is over $2 million or when there are complex financial matters like a joint business or multiple properties. If you or someone you know could benefit from working with a CDFA®, please don’t hesitate to contact us.
Written by: Hannah Ahmed, CFP®, CDFA®