Deciding How to Divorce
My blog writing took a little rest while I added some more qualifications to my resume. In order to be the best Money Coach possible to my clients, a well-rounded understanding of all milestones you might face is important. I’m pleased to say I’m now a Certified Divorce Financial Analyst. With this in mind, I’d like to share some of the basics to help you start on the right foot if you choose this path.
Divorce is devastating. Despite the fact that only 5% of divorces are litigated (IDFA), emotions can run high. And the fear of living on less than the combined household income has its own set of challenges. Money decisions are emotional on a good day, and during a divorce these emotions are on red alert:
- We are easily triggered when someone pushes our buttons;
- Sleep deprivation and emotional fatigue erode common sense;
- We are tempted to act out anger, revenge, or soothing through spending money
- And for some, there is significant pressure to learn our finances for the first time to ensure we make wise decisions when it comes to the division of assets.
The How’s of Divorce
Today, there are options on how we divorce. These options reflect monetary, relationship, and time considerations.
A trained, independent 3rd party works with you as a couple to negotiate an amicable divorce. The mediator does not give advice (legal or non-legal). Each party retains your own legal counsel; however, you do not necessarily need to have your lawyers attend the mediation discussions. Agreements can be referred to lawyers for review and assessment at the end, which reduces legal costs. Mediators are typically therapists, attorneys, financial advisors or social workers.
This is a team approach to divorce. Your family obtains professional help from experts in the legal, financial and mental health fields depending on your needs. Sometimes medical and child experts are involved. Each team member brings their expertise to the table and combines it with recommendations from the other members. The lawyers representing each party will have gone through special training. All parties are committed to find a “win-win” and cannot go to court or threaten to do so. This is a valuable alternative when one side needs advocacy – they may be mentally ill, or particularly unaware of financial matters.
This is typically the most antagonistic, expensive, drawn out means of divorce. Substantial assets may be consumed just in the divorce process alone. 5% of divorces are litigated.
If as a couple you cannot negotiate terms acceptable to both sides you can choose to have an arbiter make a decision for you. You and your spouse would each present your own argument without lawyers and the decisions will be made for you.
How Can a Certified Divorce Financial Analyst Help You?
A Certified Divorce Financial Analyst (CDFA©) is an industry designated financial expert on helping divorcing couples understand how the financial decisions they make could impact their future.
A CDFA is part of the divorce team. Think of the lawyer as the strategist – they are experts on the law and hired to represent your overall interest when is comes to child custody and financial matters. The CDFA supports the lawyer by helping you understand where you spend your money today, how it will change when you separate, and how it could further change in the future. We:
- Work with you to collect all your financial data to paint a clear picture
- Work with you to develop a spending plan so that you are crystal clear on where your money is going now, how much you need for child support and living expenses, and what expenses will be duplicated in 2 households
- Assist you in visualizing your desired financial lifestyle post-divorce
- Analyze different financial tax scenarios for dividing assets and debts to assist in negotiations
Sounds complex? Yep, that’s why we exist. Divorce is stressful enough without managing all the financial considerations too.
Why Use a CDFA ©?
Financial scenarios need to be calculated for a divorce. Lawyers are typically the most expensive resource in a divorce, so it makes sense to hire a CDFA to complete the financial work rather than a lawyer. Finances are also becoming exceedingly complex as different forms of stock compensations are given to employees, and when the alimony tax laws change, which just occurred.
Most clients who hire a CDFA © have a household income of at least $100,000 and their total assets exceed $100,000. CDFA’s often will act as an unbiased support for both sides but may be hired by one side of the divorcing couple to represent them exclusively.
Where do You Find CDFA’s?
CDFA’s are registered on the IDFA web site (Institute for Divorce Financial Analysts). By going to this site, you are ensured the individuals are qualified. If you’re thinking about divorce, I’d be happy to assist.
Your Personal Money Coach & CDFA©
Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Behavioral Cents, LLC and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.
Carrie Rattle is a Master Money Coach, Certified Divorce Financial Analyst & Founder of Behavioral Cents. She is a 30-year veteran executive of financial services. Behavioral Cents helps women achieve independence, freedom, and a bigger voice in the world. By building a fatter bank account women can confidently walk away from a bad job, build a business to change the world, or live their own dreams. Behavioral Cents delivers a private, non-judgmental atmosphere with a program tailored to change your money behaviors for the better – without deprivation. Thoughts always welcome: email@example.com.