Hear From Our Experts - Financial & Insurance - Wendy W. Spencer

Make Good Financial Decisions – Get the Right Help
By: Wendy W. Spencer

The financial issues inherent in every divorce case are often the ones that are the most overlooked. However, once a divorce settlement has been signed it can be too late to change it. Consider this: thefinancial impacts of divorce settlements can last a lifetime. Your marriage may be over, but the rest of your life is still ahead. It is important to take care of your long-term financial needs by getting the fairest, most intelligent divorce settlement possible.

Divorcing people frequently burdened by questions, such as:

-Who should keep the house? While each situation is different, sometimes one spouse wishes to keep the house. That can be an expensive proposition, with maintenance and possibly higher payments after refinancing. Moreover, the spouse retaining the house may, in the long run, be better off selling the house and receiving some of the other marital assets, such as part of a 40lK or IRA.

-How much will it cost to live after the divorce? If the individual completes their Financial Affidavit with care, they should have a pretty good idea how much monthly expenses will be. However, careful budgeting will be critical, because the new person will be living on one salary rather than two. Divorcing people also need to use their credit with care.

-How can the retirement accounts be split and how can the funds be accessed? Retirement accounts can be split a number of different ways, depending on the type of retirement plan and the plan documents. Retirement accounts can be traded for other assets, such as cash or investments. Some retirement accounts can even be tapped for additional cash without having to pay the 10% penalty, but taxes will be paid on the amount distributed.

-How can the value of a business be offset? There are a number of ways receive a portion of the value of a business. The business can be sold, but that may not be the best option. A property settlement note, income, additional non-voting shares, the marital house, retirement funds or other marital assets can be used to compensate an individual for their marital share in a business.

- Most important of all, will the clients be able to financially survive and thrive with the settlement after divorce? Divorce is a significant emotional and financial change. Careful upfront planning, with attention to the long term impacts can help improve a divorcing person’s chances to do OK after a divorce.

Moreover, not all assets are created equal and some assets ultimately may have more of an either beneficial or even detrimental effect on your financial future. Assets such as businesses and retirement accounts continue to grow. Other assets may require additional money for their upkeep. Among these, a home or an automobile can be quite costly, and hence those costs must be considered in the overall settlement. Financial situations are often quite complex and may have tax or other ramifications far into the future.

Certified Divorce Financial Analysts™, often called “CDFAs”, are experienced in assessing these situations. CDFAs can help with both developing settlement options, and estimating the impact of such options on the financial future of their clients. They also provide litigation support for clients and attorneys. This support often aids in proving and settling cases in a more timely manner. Many CDFAs also may hold other professional designations, such as Certified Financial Planner®, or Certified Public Accountant; therefore, they are well-versed in financial and tax situations.

The designation of Certified Divorce Financial Analysts™ is awarded by The Institute for Divorce Financial Analysts (IDFA) to individuals who successfully complete the training and test requirements set by the IDFA. IDFA is the premier national organization dedicated to the certification, education and promotion of the use of financial professionals in the divorce arena.

Going through a divorce often means that people have one chance to get the right settlement for themselves. As the complexity of the couple’s financial situation increases, so do the chances that at least one of the individuals may unwittingly make a decision that may not be in his or her best interests. Consulting a CDFA is one of the best tools available to couples to help them make intelligent financial decisions about their divorce.

To contact a Certified Divorce Financial Analyst in your area, please visit the websites at either www.coloradodivorce.org, or InstituteDFA.com