According to the National Center for Health Statistics, the divorce rate in Colorado was 2.9 per 1,000 people in 2022, and many of these divorces may have involved the hiring of a Certified Divorce Financial Analyst (CDFA) to navigate the financial challenges of divorce, including spousal support (maintenance) and asset division. As well as being financial planners, CDFAs can utilize their unique skills, knowledge, and experience in handling complex financial situations to help individuals understand divorce’s monetary consequences and advise clients on how to obtain an equitable financial settlement. If considering divorce or currently going through the process, consider contacting Johnson Law Group by calling (720) 744-3513 to find out how a CDFA and a seasoned Colorado family law attorney may be of assistance.
What Is a Certified Divorce Financial Analyst?
CDFAs are financial professionals specializing in divorce’s financial aspects who assist spouses and their legal counsel with achieving fair divorce settlements through their tax law, financial planning, and asset distribution knowledge and by providing advice and thorough financial analysis. They analyze data to uncover hidden assets, offer guidance concerning divorce’s tax and other financial consequences, and advise on settlement options. To obtain the title of a CDFA, these professionals must have worked in the field for several years (three years with a relevant degree or five years without) and pass the examination set by the Institute for Divorce Financial Analysts (IDFA); also worth noting is that a CDFA must complete 30 hours of continuing education related to divorce every two years to retain their certification.
What Does a CDFA Do?
A CDFA can offer those experiencing divorce multiple advantages. Here is an overview of a CDFA’s duties and responsibilities, and how their services can benefit individuals.
Conduct Detailed Financial Analysis
One of a CDFA’s primary duties is to carry out in-depth divorce-related financial analysis. This usually involves developing mock simulations focusing on asset management and spousal support, completing comparative studies illustrating asset division scenarios, as well as their financial consequences, and meticulously documenting the spouses’ financial dealings, leading to a detailed understanding of their financial circumstances.
Uncover Hidden Assets
To ensure fair asset division between the spouses in a divorce, it is necessary to obtain a clear picture of both parties’ finances, including whether they have hidden any debts or assets. CDFAs can help uncover concealed or missed debts or assets, ensuring transparency.
Assist With Financial Planning and Informed Decision-Making
During divorce, a CDFA examines a client’s goals and priorities and explores their income streams, debts, assets, and future financial circumstances, starting with analyzing current spending. In addition to assessing divorce’s immediate financial consequences, a CDFA assists individuals with long-term financial planning, helping to secure their financial future after the divorce. To do this, they offer strategic advice regarding budgeting and post-divorce finances, tailored to clients’ lifestyle changes and requirements, resulting in informed settlement decisions.
Reduce Conflict
Due to their reliance on analyses and data, a CDFA can anticipate and mitigate conflict during spousal maintenance and asset negotiations. Their ability to remain objective helps reduce tension and encourage a more friendly approach toward financial settlements.
Explore the role of a Certified Divorce Financial Analyst in greater detail, including how these professionals can help individuals navigate spousal support and other financial areas related to divorce, and discover how an experienced Colorado divorce attorney might assist clients with their divorce queries. Contact Johnson Law Group today to organize a confidential consultation.
Protect Income and Assets
CDFAs can also advise individuals on how to stay financially resilient post-divorce. This may involve suggesting that clients establish trusts to safeguard assets for their beneficiaries or purchase disability/life insurance.
Help With Debt and Asset Division
A CDFA can assist with debt and asset division and is particularly useful when handling complex portfolios. They identify marital debts and assets, ascertain their value, and propose asset and debt division negotiation strategies to ensure fair and accurate distribution between the spouses.
Minimize Risk and Tax Implications
Divorce can bring about several tax ramifications and heightened risk. A CDFA can utilize their skills to analyze the tax consequences associated with spousal maintenance or asset disposal and evaluate the risk of pursuing specific divorce financial settlements. In addition, they advise clients on how to mitigate these risks and tax implications.
Provide Expert Witness Testimony
If litigation is necessary to resolve divorce issues, a CDFA can act as an expert witness in these proceedings. Using their technical knowledge, they can provide valuable testimony and perspective concerning financial matters related to divorce.
How a CDFA Helps With Spousal Support
The Association of Divorce Financial Planners (ADFP) defines spousal maintenance as financial support that one spouse pays to the other as part of the divorce process to help the spouse maintain their living standards, sent in installments, as a lump sum, or according to a permanent or temporary schedule, and this is one area where a CDFA can help. CDFAs can identify suitable spousal maintenance levels, as part of a divorce settlement, that align with the spouses’ budgets post-divorce. To do this, they take into consideration various factors, such as age, the chance of future inheritances, income, earning potential, financial needs (for example, medical expenses, post-divorce lifestyle adjustments, and living costs), length of the marriage, and each spouse’s financial contributions to the marriage.
What To Look for When Hiring a CDFA
When looking for a CDFA, be mindful of their experience and credentials. Check to see whether they have a certification and inquire about their professional experience and skills, including the cases they have handled and the financial complications they have helped their clients overcome.
Individuals may also want to evaluate a CDFA’s fee structure before hiring them, as some charge hourly while others have sliding-scale or flat fees, impacting the total cost of their services. In addition, a person may wish to attend an initial consultation with a CDFA before agreeing to take them on to check whether the professional can explain complex financial issues associated with tax consequences, spousal maintenance, and asset division in a manner that is easy to understand.
CDFAs vs. Divorce Attorneys
While they may have knowledge of divorce law, CDFAs are not attorneys and are unable to offer legal advice. Instead, their work, which includes providing fundamental and in-depth financial advice and insights, complements that of a divorce attorney and the other parties involved in divorce proceedings, such as accountants. Through this type of collaboration, individuals experiencing divorce can expect a comprehensive support system for addressing divorce’s emotional, financial, and legal aspects.
Continue This Discussion With a Knowledgeable Colorado Family Law Attorney Today
CDFAs have invaluable skills, knowledge, and experience related to asset division, financial analysis, tax considerations, and budgeting that can aid informed financial decision-making, instrumental to those experiencing divorce. To learn more about how a Certified Divorce Financial Analyst can help people overcome the complexities of spousal support and other financial issues linked to divorce, consider reaching out to a knowledgeable Colorado family lawyer. Call Johnson Law Group at (720) 744-3513 today to arrange a consultation and get assistance with your divorce queries.
