As a Certified Divorce Financial Analyst (CDFA™), Karen Fadzen is specially trained in the financial aspects of divorce through the Institute for Divorce Financial Analysts (IDFA). The IDFA is the leading national organization dedicated to the certification and education of financial professionals in divorce matters.
Clients often assume that divorce attorneys are capable of handling every financial and legal aspect of the divorce. However, divorce attorneys are not financial planners. Attorneys are typically juggling a number of cases in various stages at once, making it easy for important financial aspects to be overlooked. Divorce attorneys generally view equitable distribution at a point in time. They do not focus on which assets make the most sense for which person from a tax standpoint or from a long-term cash flow perspective.
The role of a CDFA™ is to assist the client and his/her attorney to understand how the financial decisions he/she makes today will impact the client’s financial future based on certain assumptions. The CDFA™:
- Is a financial expert who becomes part of the divorce team and provides support for the client and attorney on financial issues. This may involve working with existing business, legal and tax advisors to help navigate through the divorce process.
- Is trained to help clients collect financial information, develop an inventory and budget of income and expenses, identify future financial goals and understand risks.
- Brings a strategic approach to settling divorce cases. Provides the client and attorney with data that shows the long-term financial implications of divorce settlement options and the tradeoffs between equitable distribution, spousal support, and child support (if applicable). This helps clients visualize the whole picture, factor in the costs of keeping assets such as the marital residence when compared to other liquid assets and retirement accounts and develop options that are fair and equitable to both parties. CDFA™s can provide alternative settlement options for division of retirement plans and pension benefits that minimize complexity. Clients often do not realize the time, cost and complexity involved in splitting these assets.
- Assist in structuring divorce settlements in a tax-advantaged manner and is knowledgeable about specific tax laws that apply to divorcing couples. Attorneys usually focus on account balances in determining equitable distribution, but do not analyze the relative after-tax value of accounts or the divorcing spouses’ post-divorce tax brackets. Tax return filings, filing status and claiming of dependents may have important ramifications as well.
CDFA™s help clients understand why the cost (tax) basis of accounts matters. The cost (tax) basis of assets in a property settlement agreement is an important consideration and should be STRONGLY negotiated, particularly since attorneys and courts will not pay much attention to taxes.
Contact Karen Fadzen to discuss how XPYRIA can help you navigate the complexities of your divorce settlement.
Phone: 412-232-3310 x212